Pre-paid probate: FCA issues warning to consumers

The Financial Conduct Authority (FCA) has issued a warning to consumers on the risks attached to pre-paid probate plans.

The plans, which remain unregulated, have evoked disquiet from nearly all corners of the probate industry. Comparing the plans to the controversial pre-paid funeral planning industry, the Best Foundation last year led calls for regulation amidst a call for views from the SRA.

This culminated in an open letter to the estate planning profession from the eponymously named Prepaid Probate Plans Ltd which was met with something of a vociferous reaction, prompting another clarification of their intentions.

Fast-forward to 2023 and the FCA have strongly advised consumers to carefully consider whether to engage with such plans due to the lack of regulatory protections in place.

The FCA noted an increase in marketing of the plans in recent months, “including from firms and individuals associated with funeral plan firms that we did not authorise, and whose customers lost money when they collapsed”.

The FCA specifically noted the lack of FSCS protection as a red flag, as well as the commission fee, the lack of guarantee that monies will be held in trust or backed by insurance, and the inability of the Financial Ombudsman Service to intervene.

They therefore issued the following warnings to consumers:

  • Be alert to cold callers and high-pressure sales tactics
  • Even where funds are held in trust, they could still invest in unsuitable investments, something they saw pre-regulation in the funeral planning industry
  • Fees are tied to the value of one’s estate. Should the value change, there may be additional fees
  • Probate may not be needed for various reasons, rendering the plan worthless
  • Executors must use the nominated professional – they will not necessarily have a choice over who is used

“When The B.E.S.T. Foundation were the first estate planning organisation to challenge this sham of a product in the summer of 2022, we were initially a lone voice until our shouting from the rooftops helped awaken others in the sector,” said Trevor Worth, Chair of the Best Foundation, continuing:

“Thankfully […] many fellow professionals, mainly in the regulated sector, joined our petition which we forwarded to many relevant bodies such as the Financial Conduct Authority, Trading Standards, and the Ministry of Justice.

The very same people that were involved in some of the failed funeral planning schemes as regulation moved into that sector were just moving their focus on to the next unregulated opportunity in pre-paid probate.”

Worth described these individuals’ continued presence in the sector as “a matter of concern”:

“The barrier to entry to our sector is still far too low.

We welcome this statement by the Financial Conduct Authority as it validates the concern of our Advisory Board at B.E.S.T. and we will continue to call out what we see is unjust and unfair and goes against the best interests of the consumer.”

Simon Cox, Director of said that following the FCA’s intervention in the funeral market, “both the practitioners and their tactics had jumped over the regulatory fence into the probate sector trying to establish a pre-paid probate market”, adding:

“We flagged our concerns to FCA and various consumer influencers and journalists, so we’re delighted to see the FCA’s warning announcement.”

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