Pay attention at the back!

It’s a busy time in funeralworld.

Last week, the Competition and Markets Authority uploaded a whole suite of working papers and other documents (21 in total) to the website providing information about their ongoing Market Investigation into funerals, seeking comment on their findings so far by 27thFebruary.

On the same day, with impeccable timing, the Funeral Service Consumer Standards Review* published the first of their own consultation papers and requested feedback within a similar timeframe to the CMA, with a deadline of midnight on March 1st.

This is a surprising coincidence, given that the original FSCSR indicative timetable last July indicated that their documents would have been drafted, approved and signed off by October / November last year, with recommendations made to government bodies, industry bodies and policy makers at the same time. All out there in the public domain, months before the CMA published their working papers.

Instead, the timetable for publication of the FSCSR draft documents has slipped by several months, resulting in a confusing juxtaposition of two sets of publications on standards in the funeral industry, both seeking comment from any interested parties within the next four weeks.

Here at the GFG we have limited time to read and digest reams of information, and we presume that busy funeral directors and others with interest in the subject will feel the same. There is a huge amount of essential reading in the 20+ CMA working papers and providing considered comment will take significant commitment on our part. Without question, our priority for all of our free reading time is the once-in-a-generation opportunity offered by the CMA investigation into funerals.

The CMA has the authority to recommend remedies to issues they may identify, and have already set out a range of possible remedies that may be effective in addressing possible competition issues they may find in the provision of funeral director services at the point of need:

(a) The introduction of a quality regulation regime;(b) measures to promote greater information transparency;
(c) price controls; and
(d) local authority procurement of funeral director services.

One can almost hear the collective sharp intake of breath as the implications of these potential remedies sink in across funeralworld.

If you’re someone interested in the potential changes that are on the horizon, then we urge you to find the time to read through the CMA papers, and send your thoughts by e-mail to

As for the FSCSR consultation? Well, if you’d like to help the trade associations get their house in order, then they’d very much like to hear your thoughts. We will be focusing on responding to the CMA and don’t have capacity to give comprehensive feedback to the FSCSR as well.

Although we may have a couple of observations.

Called to account

  In a blistering attack on the funeral industry in America this week, Michael Waters wrote in Washington Monthly:

‘The cost of death services has long exasperated Americans. In December 1856, a New York Times editorial argued that “nobody that is not comfortably off in this world’s goods can afford to die” because “to pass into the hands of the undertaker is positive bankruptcy.”

A century later, Bill Davidson noted in a 1951 Collier’s article that “while the cost of living has risen 347 percent in the last 122 years, the cost of dying has rocketed as much as 10,000 per cent.”

Not much appears to have changed in the intervening years since that 19th century New York Times piece, either in the USA or here in the UK. The high cost of funerals is a regular subject of newspaper columns and articles and the causes much debated.

The finger of blame is frequently pointed at the larger players in the funeral sector, while they, in turn justify their higher prices by claiming to provide better quality service. Indeed, a whole report emphasising quality and standards was commissioned by Dignity from Trajectory last year, making much of the fact that price was far less important than quality of service. And Dignity’s Corporate Profile publication (downloadable here) mentions the word ‘quality’ no less than 67 times, stating bravely “Our vision is to lead the funeral sector in terms of quality, standards and value-for-money.”

Hmmm. We’re not so sure that Dignity’s quality of service is justified by the prices they charge. Which appear to vary tremendously between branches, as noted in our blog post here.

Exceptionally high quality service is offered by all of the funeral directors on our recommended list, and not one of them charge the same amount for their services as the Dignity do for an equivalent funeral.

Fortunately, as noted in a series of GFG blog posts since first mentioning it last June, the Competition and Markets Authority are currently carrying out a Market Investigation into the funeral sector, and on Wednesday this week, the first working paper was published, outlining their approach to profitability and financial analysis. 

It is unlikely to be have been met with delight at Dignity PLC which evolved from SCI ownership through a management buyout in 2002. (Yes, that’s the same Service Corporation International mentioned so unfavourably in the Washington Monthly piece; the largest deathcare corporation in North America that, according to one study, charges prices that are 47 to 72% higher than other funeral homes and cemeteries.)

Nor at Co-operative Funeralcare and Funeral Partners Ltd – named alongside Dignity as the three largest providers of funeral services in the UK, and all being treated in the same way by the CMA (much to Funeral Partners’ annoyance, as can be seen in their response to the CMA’s Issues Statement here – ‘It is simply not meaningful to include Funeral Partners as the third of a group of supposed ‘large funeral directors’ and as such, it is submitted that there is no basis on which Funeral Partners should be subjected to any remedy which is not applied to the market as a whole.’)

Detailed financial information requests (going back five years and forecasting for a further year) have been sent to all three companies, with Dignity also receiving a similar detailed request with regard to their crematoria services.

From the CMA working paper –

Paragraph 25: ‘Our market-wide profitability assessment for funeral director services will focus on two groups of firms: 

(a) The three largest providers of funeral director services in the UK, namely Dignity Plc (Dignity), Co-operative Group Limited (Co-op) and Funeral Partners Limited (Funeral Partners). In the UK, these firms have an estimated combined market share of approximately 29%, based on number of deaths.

(b) A representative sample of branches in the remaining 71% of the market, which is composed of smaller providers.’

The CMA tell us at Paragraphs 29 – 30:

‘…we propose to collect data over a five-year historical period from 2014 to 2018, for both funeral director services and crematoria services (referred to as the “Relevant Period” in the rest of this working paper).

Where our profitability analysis is used to estimate detriment and therefore the proportionality of remedies, we propose to consider whether historical (or backward-looking) profitability is a good estimate of prospective (or forward- looking) profitability. We are therefore also collecting forecast information.

The largest providers of funeral director services and crematoria services told us that as part of the ordinary course of business they forecast detailed information for one financial year ahead. We are therefore collecting forecast data for 2019, giving us a total time period of 2014 to 2019.

NB Paragraph 13 of the working paper advises: ‘The Market Investigation Guidelines (the Guidelines) state that: ‘Firms in a competitive market would generally earn no more than a ‘normal’ rate of profit – the minimum level of profits required to keep the factors of production in their current use in the long run, i.e. the rate of return on capital employed for a particular business activity would be equal to the opportunity cost of capital for that activity.’

The CMA’s sampling approach to gathering data from 100 small independent funeral companies is set out in paragraphs 86 – 10 of the paper, and takes quite a different format, acknowledging that these are ‘predominantly small (often family-run) businesses, which may not have full time accountants or bookkeepers.’

Now, we aren’t privy to figures from the Co-op or Funeral Partners, as this information is not in the public domain, but as a listed company, Dignity helpfully provides the public with updates on their success. Their annual report and accounts for 2018 can be downloaded here. And from the CMA’s own findings in their Final Report and decision on a market investigation reference:

‘6.112 It seems clear that the vulnerability of customers has been a major factor in enabling suppliers to charge high prices in the sector for the past 15 years, rather than underlying cost pressures, and it appears to us that Dignity’s pricing policies have acted as the engine of these price rises, with others in the market appearing to follow its lead.’

We’re looking forward to reading about the CMA’s findings when their forensic investigation into the figures is concluded and their Provisional Decision report is published early next year. Even with redacted numbers represented by pictures of scissors, it should be illuminating. Indeed, if we were inclined to a flutter at the bookies, we’d have a fiver on the largest providers not quite making the mark when it comes to only earning a ‘normal’ rate of profit.

Level playing field?

Here’s a curious thing.

The deadline to submit responses to the Competition and Markets Authority’s consultation on their proposal to make a market investigation reference was 5pm on Friday 4th January.

This is specified on page 132 of their Interim Report, in bold font: ‘Such comments should be provided no later than 5pm on 4th January 2019‘.

Like many others, the GFG absolutely busted our guts to get our response submitted in time. In fact, much of last week was spent ensuring that we provided a thorough and honest response to all of the questions asked. We thought that the deadline was just that – the latest time or date by which something should be completed.

But for some reason, it seems that at least one of the funeral trade associations have been given an extension, and are currently ‘developing their response’, according to their Facebook post today. Three days after the deadline.

We’re underwhelmed at this, to say the least.

‘Serious concerns in the funeral sector’ identified by CMA

The Competitions and Markets Authority are proposing a major funerals probe after identifying serious concerns in the funeral sector.

It’s a long read – 133 pages – find the full interim report on the Funerals Market Study page here (scroll down for ‘Interim report and consultation’.

We publish this morning’s press release in full below:

‘Today’s interim report presents the issues the Competition and Markets Authority (CMA) has identified since launching a Market Study into the funerals sector 6 months ago.

Its initial work indicates problems with the market that have led to above inflation price rises for well over a decade – both for funeral director services and crematoria services. The scale of these price rises does not currently appear to be justified by cost increases or quality improvements.

Given the nature and significance of the issues the CMA has identified, it believes the full powers of a Market Investigation – carried out by an independent group of CMA panel members – are required. Issues include that:

  • Today, people generally spend between £3,000 and £5,000 organising a funeral, and the price of the essential elements has increased by more than two-thirds in the last 10 years, almost 3 times the rate of inflation. Organising a funeral would now cost those on the lowest incomes nearly 40% of their annual outgoings, more than they spend on food, clothing and energy combined.
  • Customers could save over £1,000 by looking at a range of choices in their local area. However, people organising a funeral are usually distressed and often not in a position to do this – making it easier for some funeral directors to charge higher prices. Prices are also often not available online, making it difficult to compare options.
  • While some smaller funeral directors have sought to keep their prices low, other providers – the larger chains in particular – have implemented policies of consistently high year-on-year price increases. A number of these have now introduced lower cost funeral options, but this doesn’t go far enough to make up for years of above inflation price hikes. The CMA’s evidence also indicates most people who organise a funeral remain extremely vulnerable to exploitation and future rises in charges.
  • Cremations account for 77% of funerals, yet there are limited choices for most people in their local area and fees charged by crematoria have increased by 84% on average in the past 10 years, more than 3 times the rate of inflation.

Andrea Coscelli, chief executive of the CMA, said:

“People mourning the loss of a loved one are extremely vulnerable and at risk of being exploited. We need to make sure that they are protected at such an emotional time, and we’re very concerned about the substantial increases in funeral prices over the past decade.

We now feel that the full powers of a market investigation are required to address the issues we have found. We also want to hear from people who have experienced poor practices in the sector, so that we can take any action needed to fix these problems.”

The CMA will now be consulting on the potential market investigation reference and welcomes any views on the issues identified in its report by 4 January 2019.

It would also like to hear from people involved in the industry and others, who may have observed instances of poor quality standards in the back-of-house facilities of funeral directors. Details on how to respond are available on the funerals market study page of the CMA website’

Beyond’s response to the responses to the CMA

The chaps over at Beyond have detailed their thoughts about some of the responses to the recent Competition and Markets Authority Funerals Market Study. Specifically, the responses from the National Association of Funeral Directors and Dignity PLC.

NB Beyond say in their introduction that they have a ‘few critiques’ concerning these submissions – it looks like once they started, they were on a roll, as the piece runs to over 5,000 words with a number of helpful tables to illustrate their points.

We thought readers of the blog might be interested in a) the responses to the CMA’s invitation for comments, all of which can be seen here, and b) Beyond’s critique of the responses from the NAFD and Dignity PLC, which can be seen in full here.

We have to confess, we haven’t read all the responses yet. The CMA has been uploading them in batches and we’ve only managed to plough through the first tranche, but we’ll be setting aside an afternoon to read the rest as soon as other commitments allow.

Hats off to Beyond for reading, analysing and voicing their observations about the content of the responses from two of the major contributors.

Happy reading!