Pre-Paid Funeral Plans, Explained: What Changed in 2022, and What to Check Before You Buy

A pre-paid funeral plan lets someone pay for their funeral in advance, at today's prices, so their family isn't left arranging and paying for everything at the worst possible moment. Genuinely useful for a lot of families — but this is also an area where things have gone badly wrong for real people in the past, so it's worth understanding what's actually protected before anyone pays anything.

What Changed in July 2022

Before 29 July 2022, pre-paid funeral plans in the UK were essentially unregulated. Since that date, every provider must be authorised by the Financial Conduct Authority (FCA) — selling an unauthorised plan is now a criminal offence. The new rules brought real, meaningful protections:

• A ban on cold calling. Providers can no longer cold-call people to sell plans.
• A ban on commission payments to intermediaries such as funeral directors, removing an incentive that previously distorted advice.
• A guarantee the funeral will be delivered as agreed — or, if the person dies within two years of taking out the plan, a full refund instead.
• Ring-fenced funds. Providers must keep customer money in a trust or insurance arrangement from the moment they receive it, and it can't be used to cover the provider's own running costs.
• A 30-day cooling-off period from the date you receive your plan documents, during which you can cancel for a full refund with no penalty.

Why This Actually Matters: What Happened to Safe Hands

This isn't a hypothetical risk. Safe Hands Plans, a Wakefield-based provider, collapsed in March 2022 — shortly before regulation took effect — leaving around 46,000–47,000 customers, many elderly, with plans that couldn't be honoured. Investigations later found money that should have been ring-fenced in trust had instead been used to buy commercial property and paid out as director dividends. Because the collapse happened before FCA authorisation began, those customers weren't covered by the compensation scheme that protects people today, and most received only a small fraction of what they'd paid in. The Serious Fraud Office opened a criminal investigation into the company.

The point isn't to frighten anyone off pre-paid plans altogether — it's that the protections described above are the direct result of cases exactly like this, and checking them properly before paying anything is a real, meaningful step, not just box-ticking.

Before You Buy: What to Actually Check

If You Already Have an Older Plan

If a plan was taken out before July 2022, it's worth checking whether the provider went on to become FCA-authorised (many did) — if so, the same protections now apply going forward, even though they weren't in place when you originally bought it. If you're not sure, checking the FCA Register is the quickest way to find out, and you can also contact the Financial Ombudsman Service for advice even about issues that arose before 2022.

Is a Pre-Paid Plan Actually Worth It?

There's no single right answer, and it's a genuinely personal decision, not a purely financial one:

• In favour: locks in today's prices against future inflation, removes a decision-making burden from the family at an already difficult time, and can bring real peace of mind to the person planning ahead.
• Worth weighing up: the money is tied up and not easily accessible for other things, some plans don't cover every cost (see above), and simply setting aside the equivalent amount in a dedicated savings account gives more flexibility, though without the price-lock guarantee.

For the fuller picture on funeral costs generally, including what happens if there's no plan in place at all, see our guide to funeral costs and financial help →

A word from The Care Compass

This is exactly the kind of decision that benefits from being made calmly, in advance, rather than under pressure. If a parent or loved one is considering a pre-paid plan, taking twenty minutes to check the FCA Register together is a small, practical way to help, without taking the decision out of their hands.

This article is for guidance only and does not constitute financial advice. Please consult a regulated financial adviser for advice specific to your situation.

You don’t have to navigate it alone.