Avalon Funeral Plans provide insight as to the recent issues affecting pre-paid funeral plan holders, particularly those associated with Iberian Funeral Plans.
Unlike in the UK, where funeral planning is tightly regulated by the Financial Conduct Authority (FCA), there is no comprehensive governance or regulation for pre-paid funeral plans in Spain. The only mandatory regulation is that any provider in Spain that offers a plan with a UK funeral option must be regulated by the UK regulator. If they’re not, they’re breaking the law.
We don’t know the exact circumstances around Iberian Funeral Plans, but this situation highlights the risks of purchasing a funeral plan from an unregulated provider in Spain.
Consumers who purchase a funeral plan from an SL-registered company in Spain, without ties to a UK-regulated provider, do not benefit from the financial protections that UK-regulated firms must provide.
In Spain, there are only two providers that are regulated in the UK offering funeral plans and under the UK rules, therefore all those plans are protected under the UK regulation (Avalon and Golden Leaves). All the others are unregulated funeral plan providers that either do not operate a trust fund at all or operate offshore trusts or other accounts that lack oversight. This can leave consumers vulnerable should the company fail, as appears to be the case here.
Similar situations have happened before. One of the most significant cases was the collapse of Safe Hands Funeral Plans in 2022 but there are others
Safe Hands, which had around 46,000 customers in the UK, fell into administration in March 2022 prior to the UK funeral plan sector regulation coming into force in July 2022. Investigations by the firms’ administrators found that a large proportion of offshore funds, which should have been securely held in a UK trust, were potentially misused. There is currently an investigation by the Serious Fraud Office in the UK into the company and its parent, SHP Capital Holdings Ltd.
As a result of their collapse, there was a shortfall of over £70 million, leaving customers in financial distress. Administrators later confirmed that plan holders may only receive between 8.5p and 12.5p for every £1 they had paid, illustrating the scale of loss that can occur when funds are not adequately protected.
If you had an Iberian Funeral Plan, what should you do in the first instance?
Any Iberian Funeral Plan customers affected should seek immediate advice from a consumer protection organisation.
We understand that the Citizens Advice Bureau is providing guidance on how to proceed. While they may not have an active class action in place at this time, they will be able to advise on legal options and potential next steps.
We recommend that affected individuals contact Citizens Advice directly via their official channels:
And checking your own Plan provider?
Any other customer that is holding a funeral plan with an unregulated provider should do their own research and consider their options. They will need to decide themselves about where they’ve put their money and how safe they believe it is.
What we can say is that we believe it’s better with one of the two UK regulated providers that are currently operating in Spain because in the unlikely event of either of them going out of business, all their plans have protection from the Financial Services Compensation Scheme (FSCS), which means they’d get an equivalent plan or compensation – much like the UK banks.
How can Avalon help?
Can Avalon do anything to support people with an Iberian or unregulated plan?
Yes, we recognise the financial and emotional distress that affected customers may be facing, and we are committed to helping in a fair and responsible way.
To support those impacted, we have established a financial assistance initiative for customers holding Iberian Funeral Plans or any other unregulated plan.
Our approach ensures that:
- Customers have a clear pathway to acquire a fully regulated and FCA-authorised funeral plan.
- We provide financial assistance to ease the burden of moving to a secure, protected provider.
- Affected individuals can speak to us directly to discuss their situation, with no obligation.
We believe this initiative reflects our commitment to good consumer outcomes and ensures that affected customers can secure a regulated plan that guarantees financial protection and peace of mind.
What about the longer term?
This situation reinforces the need for stronger consumer protection in the funeral planning industry, particularly for British expatriates living in Europe.
The key message to consumers is to do your research, and we feel that they should consider only purchasing funeral plans from UK regulated providers. The Financial Services Compensation Scheme (FSCS) offers a significant level of protection for customers of UK-regulated firms, ensuring that funds are properly safeguarded and that customers would be fully compensated if a provider were to fail.
At Avalon, we always advise consumers to check that their chosen provider is properly regulated and that their funds are protected within a UK-based trust fund.
Additional Points:
The type of Trust Fund matters: A trust fund on its own, does not offer customer protection if it is not managed properly or if it has been set up overseas.
Regulation matters: Without regulation, consumers have no guarantee that their money is properly protected.
Due diligence is crucial: We urge consumers to carefully research any funeral plan provider before committing. Checking for FCA authorisation and how customer funds are secured should be a priority.