UK house prises continue to rise due to a shortage of family homes, the ...

UK house prises continue to rise due to a shortage of family homes, the Halifax reports

Despite the worst recession since the second world war, the price of the average home in the UK has rocketed by £43,577 since the start of the first lockdown two years ago, the Halifax has said.

The UK’s biggest mortgage lender, part of Lloyds Banking Group, said the 18.2% rise increased the cost of an average home to £282,753.

Buyers seeking more space saw a 21% rise in the price of detached homes compared with a 11% rise in flat prices over the same period.

Higher mortgage rates will start to reduce buyer affordability and the amount people can borrow, which may dampen prices.

Increased living costs will inevitably affect how much first-time buyers can save, borrow and spend on a property.

As we enter the traditional springtime buyer activity season, estate agents are already reporting continued demand and a shortage of larger family houses, which means sellers can obtained higher prices.

Funeral plan provider goes bust – what do you now if you have a prepaid plan?

Following the recent utility providers bankruptcies, another inflation-led disaster is brewing in the funeral industry. Safe Hands, a UK ‘prepaid funeral plan’ provider, has collapsed into administration, leaving thousands of customers worried about what to do now, plus many others concerned that other companies will follow suit amid soaring costs and inflation.

The latest scandal follows Financial Conduct Authority (FCA) belated announcement that it will start regulating firms that provide and arrange prepaid funeral plans from 29 July this year – shutting the door after the horse has bolted.

After this date, should a funeral plan provider fail to meet the FCA requirements, they will not be allowed to sell plans or carry out funerals. Ironically, this could have the effect of pushing more firms into bankruptcy.

Prepaid funeral plans are constantly advertised on daytime TV encouraging people to pay in advance for a future funeral.

But if the firms get their sums wrong or the cost of providing the funeral rises sharply, as it is right now, they could fail to meet their obligations.

For this reason, it is safer to stick with nationally known reputable companies that you are confident will be around for many years to come.

Insurance vs Prepaid Funeral Plans

The other way of providing for future funeral costs is the traditional method of taking out insurance which pays out on your death. Whilst the sum is guaranteed by regulated insurers, the amount you have insured your life for may or may not be sufficient to cover the cost of a funeral at least you know that it will be paid out.

Personally, I have far more confidence in insurance companies, like Legal and General and Sun Life, that have been around in some cases for over a hundred years than a funeral plan provider.

Insurance companies are heavily regulated and employ actuaries to calculated liabilities years into the future. They also have reserves which can see them through the bad times like world wars, recessions and depressions.

Funerals can easily cost in excess of £5,000 excluding the burial plot, but the price of everything has soared in the last year due to inflation and material shortages.   

Safe Hands, Dignity Funerals Limited will provide existing customers with funeral care arrangements until 20 April 2022, and customers should contact the customer services team on 0800 640 9928. There is no confirmed plan in place after 20 April.

Customers can make claims as creditors in the administration process, as the company does not have sufficient funds to be to issue any refunds or meet its obligations, and existing contracts are considered as “cancelled” – just like that. Safe Hands customers will be contacted by post with details of how to make a claim.

Customers are unlikely to get much out of the administrators after they have paid debts and collected their hefty fees, however, you paid for any part of your funeral plan by credit card, you may be able to claim under Section 75 of the Consumer Credit Act 1974.

Customers should cancel their direct debits/standing orders with immediate effect and try to retrieve recent payments under the DDM guarantee. Watch out for the vulture scam callers.

Should you be called by someone claiming to be from Safe Hands Plans, FRP Advisory or any other company claiming to be involved in the administration, hang up and call the freephone helpline of the administrators (Monday to Friday 9am-5pm) on 0800 640 9928 or email safehands@frpadvisory.com.

Worryingly, six funeral plan providers have not even applied for authorisation

See the FCA website to find a published list detailing which firms have yet to apply for authorisation, as well as those who are transferring their books to other providers.

There are six companies who have not yet applied for authorisation are:

·        Fox Milton and Co Ltd trading as Unique Funeral Plans

·        The Independent Funeral Partnership – this is part of Memoria Ltd, which has submitted an application. Memoria Ltd trades as Low-Cost Funeral Limited and Affordable Funerals. The Independent Funeral Partnership is in the process of potentially acquiring another provider that has already submitted its application to the FCA.

The FCA is encouraging anyone thinking of buying a prepaid funeral plan to avoid doing so from one of these four companies, until they have clarified whether they intend to apply for FCA authorisation:

·        Iberian Funeral Plans

·        Not For Profit Funeral Plans

·        PS Cremations Funeral Planning Limited

·        Sovereign Lifecare

If you already have a funeral plan with one of these providers, you should get in touch with them as soon as possible to find out your options.

There are 15 firms transferring plans to other providers and each of these will be contacting their existing customers in due course.  Check if your funeral plan is with one of these companies, and get in touch with your current provider for more information.

There are a further two firms who have withdrawn their applications. However, both Eternal Peace Funeral Plans Ltd and Aura Life Limited have confirmed they plan to resubmit their applications to the FCA.

If your provider does not get authorised by the FCA you have no protection from the FSCS should your funeral plan provider go into administration before 29 July, or if it has its FCA application refused.

The FCA is working with funeral plan providers to ensure customers’ plans are transferred to another provider before 29 July, if the company isn’t likely to receive authorisation.

In the meantime, customers will have greater protection when taking out a prepaid funeral plan on or after 29 July this year.

At very least, make sure the provider is registered with the Funeral Planning Authority, which provides a form of non-compulsory self-regulation, which means providers that sign up have to adhere to “certain rules” and a “code of practice”.

Source: Clair Casalis, MSE.

Other Financial News

NI tax rises kick in, most employers and employees will pay an extra 1.25p in the pound, but lower paid will pay less due to recent threshold changes in Rishi Sunak’s budget.

Economic winter

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