The government has been urged to set up an emergency fund to help victims of failed funeral companies, after a recent collapse of a firm left 46,000 people facing losses.
In March, Safe Hands collapsed into administration, in a blow for customers who had used it to cover their funeral costs.
Campaigners have warned that other firms could also fail, leaving customers in “funeral poverty”.
FRP, the restructuring firm appointed to handle Safe Hands’ administration, says the company does not have enough money in its coffers to cover its commitments.
For the next six months, Dignity, one of the UK’s biggest undertakers, has agreed to provide funerals for Safe Hands customers on a “not-for-profit” basis and will offer plans to surviving customers.
However, many are set to lose money as a result of the collapse.
The Safe Hands failure comes at a critical time for the funeral-selling industry, which will face tough new rules from 29 July, when it comes under the remit of the Financial Conduct Authority (FCA).
Among new protections for consumers is a ban on certain sales tactics, such as cold calling. Customers will also be eligible for the Financial Services Compensation Scheme, so their money is protected if their plan provider fails.
To continue operating, funeral sellers must pass strict tests set by the FCA to gain authorisation. It is feared the change will expose weak players in a sector that has been criticised for aggressive sales tactics and poor value.
Campaigners have started a petition calling on the government to create a fund for victims of failed companies. They fear more people will find themselves in the same situation as Safe Hands customers and are calling on the government to “protect the victims from funeral
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