• March 29, 2024
 Calling for pre-paid probate regulation

Calling for pre-paid probate regulation

We recently wrote about the welcome regulation of funeral plan providers by the Financial Conduct Authority (FCA). It has become painfully clear how crucial regulation is after the company Safe Hands went into administration earlier this year. Their customers’ funeral plans have been voided and it is likely that no more than 20% of their money will be refunded.

The FCA has warned the public not to buy funeral plans from companies that, despite withdrawing applications for FCA authorisation, are still advertising funeral plans on their websites, such as Empathy UK Funeral Plans.

From 29th July 2022, any company without authorisation cannot legally sell pre-paid funeral plans unless they meet the regulations.

One such regulation includes looking after and using customers’ money responsibly. But unfortunately, there are companies out there with no scruples once you’ve handed your money over.

The FCA’s new regulations will hopefully flush out such companies from the list of pre-paid funeral plan providers. However, pre-paid probate is a service that remains unregulated.

Pre-paid probate: same model, same problems

Imagine you run a company. Doesn’t the following sound like the perfect business model? The business receives upfront payment for something that it might not deliver for years, and the customer won’t be around to measure the quality of that service against their expectations. Plus, target customers include the elderly, who are more likely to be influenced by high-pressure sales tactics and a narrative spun around easing the burden of future bills for loved ones.

This model could describe pre-paid funeral plans or pre-paid probate. The only difference is that the latter is not properly regulated, and there are no immediate plans for it to be.

Therefore, pre-paid probate is an ideal shift to make for funeral plan providers who are not in a position to register with the FCA.

However, for customers and the industry as a whole, it is the same model with the same problems. And a report from the Legal Services Board agrees. The report, written by ITC (the largest probate company in the UK), covers miss-selling and fraud, saying: “Pre-paid probate is, in our opinion, the largest dormant but inevitable disaster that will hit this whole sector.”

Why wait for history to repeat itself?

Why wait several years for the same problems that have faced the funeral planning sector to build and happen again? Why let more customers suffer the same stress and financial loss when a pre-paid probate provider inevitably goes under?

The Best Foundation believes that change needs to happen now.

Regulation of pre-paid probate is essential for protecting customers’ money. If a provider fails, customers will have access to the Financial Services Compensation Scheme (FSCS). Financial losses – like those Safe Hands’ customers have faced – could be avoided.

Our Code of Conduct, applicable to all Best Foundation members, prohibits the selling of pre-paid probate products.

Best prioritises customer protection, so we offer a client guarantee, making sure no customer of a Best member ever loses their money when it comes to estate planning. But we want safety for all. That is why we will fight and campaign for better regulation of the estate planning industry as a whole.

Why regulate pre-paid probate?

  • To ensure that companies offering probate services are responsible with customers’ money
  • To prevent mis-selling of probate (some estates do not require it)
  • To make extra charges clear to customers from the outset
  • To provide a financial safety net so that if a company fails, customers can apply to FSCS
  • To prevent cold calling as a high-pressure sales tactic

This article was submitted to be published by the Best Foundation. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.

Best Foundation

1 Comment

  • We want to commend the Best Foundation for this cautionary article about the potential problems that will present with pre-paid probate plans, or at least some of them.

    This may seem a curious position being adopted by us – Probate Protect ltd – a company set up specifically for the primary purpose of marketing and selling a pre-paid probate service. Well, it is not in that we agree with the intent of the article and most of the content.

    The brains behind Probate Protect mainly come from an authorised and regulated environment and understand, more than most, the critical necessity of a robust, secure and reliable service to customers protected and treated fairly. We took 2 years to research the market, look at what was being offered to clients and designed a product (possibly over engineered) which already meets all of the highest standards and compliance that any future FCA regulation might require. Like it or not, we believe that high quality pre-arranged Probate Plans will penetrate the market for client’s strategic planning rather than financial reasons. Our arrangement, priced on a bespoke basis to match the specific needs of the client, uses Highly qualified SRA regulated specialist probate solicitors to deliver the future service, a specialise Trust managed by regulated corporate Trustees, responsible for overseeing regulated fund managers carefully managing retained client money. We are also looking to overlay other measures to guarantee the future delivery of the service. That is what a proper pre-arranged Probate Plan needs to look like.

    Like the Best Foundation we are also concerned that funeral plan companies and others will migrate to the unregulated landscape of prepaid probate, and they may offer a simplistic one size fits all which may not stand the test of time. But, in the interests of balance, it must be observed that as well as one prepaid funeral plan company entering into liquidation, history records that the odd Solicitor, estate planner and will writer have also gone bust and some others have given clients poor advice or service. There are also some excellent, well managed and very secure prepaid funeral plan companies who have sailed through FCA regulatory requirements, and they offer an excellent insight into how to construct and deliver a safe product.

    We agree with the Best Foundation that prepaid probate plans should be regulated. We would go further, we also believe that ALL legal and quasi legal services should be regulated. However, in the meantime, commenting on and wishing for pre-paid probate regulation, will not stop the wrong people selling the wrong prepaid probate product, possibly to the wrong people.

    The report written for the Legal Services Board by ITC (“the largest probate company in the UK” – perhaps they have a vested interest in maintaining the status quo?) does not help by merely observing potential imminent disaster. There is nothing wrong with the concept of prepaid probate plans, but the structure must follow a robust model. Like prepaid funeral plans, prearranged probate plans will eventually become a standard product.

    Instead of the Best Foundation prohibiting members from selling prepaid probate products perhaps they would like to form an alliance with Probate Protect Ltd to ensure that their clients can at least examine the best product. However we would cation that our bespoke priced plan is not appropriate for everyone!

Comments are closed.