Fairer Finance & Funeral Plans: James Dunn Responds 3

fairer finance

Fairer Finance, a consumer group whose aim is to get people fairer deals from financial services, recently published a report into funeral plans. Over 200,000 funeral plans are sold each year in this entirely unregulated market, so the report took a detailed look at the major players in the funeral plan world and how they do business.

 

The report was funded by Dignity PLC, a £1.2bn FTSE 250 listed company, who are the second largest provider of funeral services in the UK. Dignity are also one of the largest providers of funeral plans in the UK. Although they funded the report, James Daley of Fairer Finance was quick to reassure readers that “Fairer Finance was given full editorial control of the report, including the right to criticise the conduct of Dignity.

 

As one of few investigations into the plan market, this report received a lot of press attention and is likely to be referenced for years to come. One of our founders, James Dunn, read the report eagerly on its release and collected some thoughts.

 

Within this post there is a number of questions addressed to Fairer Finance. We have sent these over to James Daley of Fairer Finance and will update this post in the event that he responds.

 

UPDATE 17/07: James Daley has responded to our questions. We have included his responses inline.

 

Information about our own funeral plan can be found here.

 

***

 

Firstly, I’d like to say that I welcome the Fairer Finance report into funeral plans. Beyond may be a relatively new arrival to the funeral plan industry, but in the seven months since we’ve been selling plans we’ve quickly learnt that the industry is in a bit of a mess.

 

Actually, let’s not beat around the bush – it doesn’t take a genius to see that the funeral plan market is a disaster waiting to happen. Widespread reports of pressure selling, opaque funds, comparison sites with no comparison, families left making up shortfalls, funeral directors refusing to take plans…this litany of malpractices adds up to a prime time TV expose in the making. This list of murky practices is longer even than the list of clauses found in many plan contracts.

 

So, against this backdrop, we thought it would be remiss of us not to put a few questions back to Fairer Finance (and their sponsors, Dignity) on their report.

 

Commissions, commissions, commissions. What is fair? What is reasonable? And where, oh where is Age UK’s tasty £9.4 million?

 

Commissions. You get someone else to sell your product because you don’t believe you can sell it yourself. In return, you’re happy to give them a kickback for selling the product you couldn’t sell. Commissions are odd, commissions are murky.

 

The report rightly identifies one of the key concerns with commissions, “it is often difficult for customers to tell where their money is ending up”.

 

Golden Leaves, Golden Charter and Safe Hands are all identified as companies paying commissions. The author mentions other cases and ends with the forthright conclusion that, “High-pressure sales and misrepresentation of products identified by this report are likely to be driven by the commission received by operatives for making a sale”.

 

It’s pretty odd then that the report totally fails to question Dignity over their relationship with Age UK and the commissions paid. This was big news last year with Age UK castigated for accepting millions of pounds to promote a particular funeral firm – which allegedly charges significantly more than some rivals.

 

It took us only a cursory search to find the figures that drew this outrage. Age UK sold 18,000 funeral plans for Dignity and got an eye-watering £9.4 million back.

 

It does not take advanced calculus to figure out this is £522 commission per plan sold. Great work for a charity helping the elderly if you can get it.

 

And so, my first question to James Daley of Fairer Finance is…Why did you not look at the commissions paid by Dignity to Age UK and why did these not feature in your report?

James Daley confirmed that he had asked providers about commissions and that they did not want to share them with him. Mr Daley states that he had not previously seen the Age UK article we referenced in the Independent. He has now raised this with Dignity and is awaiting a response. Mr Daley states that he agrees with our sentiment that commissions are probably too high and that he believes at the very least they should be disclosed. Mr Daley also points out that he believes there are bigger issues concerning size of margins in the funeral industry generally.

 

The one where the author can’t get in touch with Dignity

 

Everyone expects a funded report to be somewhat relaxed on holding the funder to account. That’s just par for the course. However, it shows startling chutzpah to let the funder off the hook in one paragraph and then lay into their largest rival in the next.

 

The author, no doubt devoted to his quest for transparency and fairness, asked the Co-op what their admin fee was. We think this is a fair question so sympathise with the author when he writes, “Co-op refused to tell us how much it takes as an admin fee, claiming that this was commercially sensitive.”

 

Pretty clear to us that the author doesn’t think too highly of this. Yet, did our eyes deceive us when we read about Dignity’s admin fee just two sentences earlier?

 

On Dignity: “Dignity pays all customer money into a trust, after which a payment is immediately made back to Dignity to cover the costs of selling and administering the plans. It’s not clear how much this is.

 

I mean, bloody hell. There are two options here. Either the author failed to ask Dignity what their admin fee was or he asked them and then refused to report it. You just can’t get away with that if you then have a go at a company for not being transparent in the next paragraph.

 

So, let’s ask Fairer Finance then…Did you request the admin fee from Dignity? If you did, what was their response?

Mr Daley confirmed that he requested the admin fee from Dignity and that they did not disclose it. Mr Daley explains that the Coop was uncooperative with him at first and that this led them on balance to be a bit harsher to Coop than Dignity. Mr Daley adds that since the publication of the report the Coop has been more supportive. Mr Daley also points out that the word “also” was removed from our text and that this had been meant to imply that both Coop and Dignity had refused. We removed this because we felt it superfluous in the context but we recognise that this wording could be intended to put Coop and Dignity in the same bracket (i.e. both were asked and both refused).

 

Another example of fitting the evidence to the narrative is when the author looks at cancellation fees. Two customer quotes are used in this section to show customers’ distaste of these fees. One for Safe Hands, whose fee is £495, and one for Open, whose fee is £345.

 

Dignity boasts the second highest cancellation fee at £395 yet somehow not a single customer contacted by Fairer Finance had a bad word to say about it?

 

Caught between a rock and a hard place. How Dignity has its competitors in a bind over cremation fees…

 

Dignity is one of only two providers who fully guarantee cremation costs. Guaranteed costs are an unreservedly good thing for customers. They remove any question that there will be a shortfall in plan value when the time comes.

 

So, are Dignity good because they guarantee cremation costs?

 

Well, kind of.

 

The question the report fails to ask is ‘Why do these plans end up with such massive shortfalls?’

 

Could it have anything even remotely to do with Dignity charging the highest cremation fees in the country?

 

As our 2017 Cremation & Burial Cost Index showed, Dignity have the dubious honour of operating the most expensive crematoria in the country, charging a huge £999 in some areas. Nine of their sites charge this lofty thousand-minus-one price. To further burnish their high costs, Dignity operate 16 of the top 20 most expensive crematoria in the country. Without wanting to labour the point too much, the average price at a Dignity crematoria is 18% higher than the national average.

 

Put simply, a Dignity crematorium is an expensive place to be cremated.

 

Dignity aren’t just the most expensive cremation company. They are also the largest. Dignity control 44 of the UK’s 282 crematoria and are the only single company who can claim to have national coverage. Many locations will have local monopolies, as there are understandably stringent planning restrictions for the building of new crematoria.

 

These two points combine to put Dignity in a enviable strategic position.

 

Dignity can safely charge high cremation fees, and increase them each year, knowing that they will still be able to ‘guarantee’ this particular disbursement to their funeral plan customers.

 

Their competition, however, has to take a gamble.

 

On the one hand, increasing cremation fees force Dignity’s competitors to raise their ‘cremation contribution’ to ensure customers do not face a shortfall.

 

Yet, on the other hand, every pound they increase the contribution by raises the total amount the customer pays and therefore makes them more expensive compared to Dignity.

 

Dignity’s competition are in a pretty weak position here.

 

They either have to keep the disbursement contribution low and risk customers’ facing a shortfall…or, they have to increase the disbursement contribution and lose the customer to Dignity!

 

A third question…how can plan companies both compete fairly and avoid disbursement shortfalls, when one of their competitors has a vested interest in high disbursement fees?

Mr Daley responded by saying that price of services in the crematoria sector is a separate debate and that the important thing for prepaid plan customers is that they understand the costs and what their plan will cover before they buy the plan.

 

Picking on the little guy

 

In the section titled ‘Regulatory Breaches,’ the author again makes a valid observation. He points out that Safe Hands only show customers a total price on their product pages and that this puts them in breach of their association rules to provide customers with an itemised price list.

 

Pretty reasonable in my mind, and here’s how the author puts it: “The NFFD requires members to provide “all customers with an itemised price list, and to display this price list in a prominent place at all times.” Safe Hands simply shows headline prices on its product pages…An ‘itemised’ price list would show all costs, including administration fees and commission payments. These should be clearly separated from the headline cost. This is not what Safe Hands is supplying.”

 

Unfortunately however, the author has once again found a good point but then not provided anywhere near the full picture. You see, the NFFD is the youngest and smallest of the funeral trade associations. It is only a few years old and has only a few hundred members.

 

The most important two are the NAFD and SAIF. The NAFD traces its roots back to 1898, SAIF to 1989. Both have thousands of members. Both have a seat at the table in talks with government. Together they cover at least 80% of the funeral trade. I cannot imagine the author simply did not find them.

 

Although NAFD and SAIF are clearly in a different league to NFFD, they do have one area where are all three united. Can you guess what that its?

 

That’s right! They all have a Code of Conduct for members to abide to!

 

And, lo and behold, both have rules that tell their members to give customers an itemised price list. You can see their rules here and here.

Why, therefore does the author not make exactly the same point about Dignity (NAFD member), Co-op (NAFD member) and Golden Charter (whose stakeholders are SAIFCharter members), none of whom provide customers with itemised quotes on their product pages either?

 

It astonishes me that the author has gone out of his way to make a somewhat labyrinthine observation about one particular provider, but then failed to follow it through with anything approaching proper rigour and fairness when it comes to applying the same measure to the financial backer of his report.

 

And so, my final question is…Based on the same measure you used for Safe Hands, do you also agree Dignity, Co-op and Golden Charter are in breach of their trade association’s terms?

Mr Daley explained that the objective here had been to compare each business against their regulatory body and to identify rules breaches. In this case, it meant most providers were counted as falling under their plan regulator (the FPA) as opposed to their trade body association. Given that Safe Hands are not a member of the FPA, Mr Daley measured them against the code of their association body, the NFFD.

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3 Comments

  1. Golden Charter is not owned by SAIF. It’s stakeholders are SAIFCHARTER members.

    A small but significant point!!

  2. I’m afraid that the fashion of death is but a mere reflection of the fashion of life – with nowadays political correctness and moral indignation disguising themselves as moral fibre. The latter died a long time ago. A few of us may work towards its resurrection in the hope that honesty and service will be highly regarded and properly rewarded once more. However, at the moment, when articles like the one commissioned appear, it feels like pushing water uphill. Well done on a well written critique.

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No Dignity 1

Dignity letter

NO DIGNITY IN DEATH: MAJOR FUNERAL CHAIN BIDS TO SILENCE PRICE COMPARISON WEBSITE

  • After life services comparison website Beyond bidding to bring transparency to troubled funeral industry by making prices easily available online
  • Dignity, UK’s major funeral chain, exposes its own hypocrisy by quibbling with Beyond’s pricing, while refusing to provide evidence to the contrary
  • CMA is conducting a full market investigation after its initial study found a concerning lack of transparency had seen costs for the consumer spiral in recent years, led by the major chains
  • Beyond invites Dignity to publish its pricing in the name of transparency and to stop trying to shut down the conversation around death in this country with baseless threats

BACKGROUND

  • CMA studied funeral sector through second half of 2018 and found such a concerning landscape that it is now conducting a full market investigation
  • Central to its initial findings was the impact of major chains on the disproportionately spiralling costs in the sector
  • Dignity was explicitly noted in the interim report as “well above international benchmarks” while it was also reported that “the Most expensive crematoria in the UK are run by private providers, in particular Dignity”
  • The report concluded that “Dignity’s pricing policies have acted as the engine of these price rises, with others in the market appearing to follow its lead”
  • Dignity operates 19 of the 20 most expensive crematoria in the country
  • The average price of a funeral is now £4,271
  • Funeral prices have risen by 33% since 2016
    Average package available on Beyond is £2,807. Beyond has calculated that the funeral sector – which is a £2 billion a year industry – is overvalued by 35% or £650 million
  • Beyond calculated last year that there is a significant ‘chain premium’ between funeral directors. On average, an independent funeral director’s fees were £2,287 while a chain funeral director charged on average £3,771 – 65% more. Dignity is the most expensive of the UK’s major chains
  • Despite stating that it will do so on several occasions in the last few years, Dignity has still not published its prices online to allow customers to compare value – the lack of transparency in the funeral sector was a key pillar of the CMA’s findings and reasoning for launching its full investigation

CORRESPONDENCE BETWEEN DIGNITY AND BEYOND

  • On January 15 2019, Steve Wallis, Commercial Director of Dignity, sent Beyond a letter threatening further action if what it described as ‘misleading information’ was not removed from Beyond’s website.
    • A copy of Dignity’s letter can be seen here

     

  • Beyond has no intention of removing Dignity’s prices from its website. Beyond sourced this information first-hand by visiting 800 Dignity branches around the UK. Evidence for any prices that may have changed since that research was conducted is welcomed, as is the full publication online of Dignity’s prices – something it has long promised to do but is still not forthcoming.
    • A copy of Ian Strang’s open letter in response to Dignity can be read here or pasted below

 

Ian Strang, CEO of Beyond, comments:
“Dignity’s insistence on punching down at the little guy is incredibly undignified, but the fun and games of our back and forth should not distract from the serious subject matter, and the major underlying issues in the funeral industry. For far too long, consumers in this country have had their grief exploited and the major chains – particularly Dignity – have been at fault. This has long been our view but now it is shared by the CMA. Beyond has always pushed for full transparency and Dignity’s resistance to this, and now its attempts to intimidate and shut down the conversation, are merely further evidence of its insecurity and concern in the face of a growing storm of public disapproval and regulatory criticism. “All we are doing is trying to give customers the relevant pricing information as easily as possible. Dignity refuses to do this themselves so we’re just trying to do the legwork for them, but they are welcome to set us straight at any time by publishing their prices online.”

 

BEYOND’S RESPONSE TO DIGNITY

Dear Steve,

Last week, I received your 48-page letter dated 15th January 2019, entitled “Misleading Advertising on Beyond”.

Sadly I didn’t find time to peruse it until the weekend, when I slogged my way through its soul-sapping marathon content at a child’s birthday party, my mettle steeled by the sugary fuel of Haribo. Alas, as such, I missed most of the aging magician’s performance. And yet, by the time I put the document down, I still had the feeling I had been witness to an archaic attempt at sleight-of-hand.

I can only imagine that the production of this rain-forest-threatening tome was a cold act of revenge for our 13,000-word report dissecting Dignity and its decades long profiteering. A poison potion sent to chasten us. Dead hit, I must admit … for immediately upon finishing reading, I fell into an act of slumber that lasted almost minutes, until my new-born’s shrill, illogical demands overtook your own.

I note that you are a 20+ year veteran of Dignity. I was unaware of you prior to your missive, and one could hardly now claim we are familiar, but in the spirit of our growing friendship, I do hope that you didn’t suffer too greatly with the 70% share price slide that followed our report and that you were able to sell out in summer 2017 alongside other senior management.

Your letter is addressed ‘Private and Confidential’. For a moment, I cringed at the sight of the imposing capital, bold typeface, wielded at me by a large corporation. I swatted my swarming children aside lest they became privy to its contents. Then, it dawned on me that you likely just used the same letter template as your customer pricing sheets and forgot to remove the confidential warning.

Yet, let us hasten past this coquettish chit-chat and move on to the business end of our dalliance. You have suggested, in your letter, that we perform various acts of perdition which pique you. Fortunately, I would suggest that your view on each of those acts is either inaccurate, misleading or the unfortunate lovechild of each, a remarkably bold attempt to stifle the transparency of your pricing at a time when funerals are intensely in the spotlight with the CMA investigation.

You will find our response to your individual points below, however, it does feel as if we are adventuring over old territory here. From the day that we first lifted the shadowy veil from your prices, we have been crystal clear on how these were gathered and displayed.

We also accepted an invitation to meet with Simon Cox and Yvette Smith from Dignity on the 24th April 2018. I suggested we meet in a public place where there would be plenty of witnesses. Disappointingly, no-one appeared amused by this. We discussed the Dignity pricing, our methodology, and I note from the quaint meeting notes which Dignity distributed afterwards, that you understood and accepted how our pricing worked. It’s unclear why the level of understanding at Dignity has taken such a capital fall since then.

To summarise our view (both at publication and now):

  • Dignity PLC price at a substantial premium to other providers
  • Dignity, despite being a company of sizeable resources, was not willing to put full prices online in a reasonable timescale
    • In January 2017, Dignity committed to having full pricing online by January 2019 (note, prices still are not published)
  • We believe that customers should be able to easily see Dignity’s prices online

Based on this, we gathered the publicly available price sheets from Dignity branches and published the pricing on our site so that they are directly comparable to other businesses.

Regarding your specific concerns

A.a – Incorrect prices

We note that since we gathered your pricing, you informed the markets that you were freezing prices for your traditional funeral service. We have not seen any update on that public messaging from you. Further, we have asked you on several occasions to provide updated pricing, in case it had changed, so we could update our website, and you have refused to do so.

I find it entirely risible that you complain we have your pricing wrong, while simultaneously refusing to publish that pricing transparently online. It’s an indefensible position.

I also note that you have titillated us with 5 examples of branches where you believe your pricing now differs from that listed on our website. Unsurprisingly, you have neglected to include the actual customer pricing sheets. Given that the first time around, it took the skills of a sudoku grandmaster to decipher them on behalf of consumers and make them easily comparable with other funeral directors, we simply request that you pop them over to us and we’ll deploy our cryptographic experts to decode them, before making any necessary changes.

In short, as always, please send us your pricing sheets and we’ll swiftly update the website. No charge 🙂

Now, given your evident predilection for ‘codes of practice’, I note that as a member of the NAFD, you are obliged to provide pricing sheets with full itemisation to any ‘clients or prospective clients’ who ask for them. Recently, my thoughts have drifted (as may have your own) towards my mortality. When I pass, I may wish to consider a Dignity funeral and I would like to put some money aside to cover the cost. I likely only have a few decades, so will need to begin saving swiftly. I do enjoy travel and have not yet decided where I would like my service to occur, so please could you provide me with itemised pricing sheets for all of your branches, so that I may make a considered decision.

A suitable dispatch address would be “Beyond, 3 Loughborough Street, SE11 5RB”.

 

A.b – Dignity’s ‘simple’ service

We do not display individual funeral directors on Beyond based on any “simple”, “specious” or “spurious” package they might have conjured up at an away-day brainstorming session in a Travelodge with fancy biscuits. We show like-for-like itemised pricing across all funeral directors with a default selection that the customer can then modify.

 

A.c.- Misleading sorting

We are unclear what you would like us to do here. On the one hand, you want us to take your prices down (presumably so that people do not see them). Yet, on the other hand, you do not want to appear at the bottom of the results (so people can see them). Which of the hydra’s heads should we be recoiling from?

We display the Dignity branches in their accurate geographic locations on an interactive map, which is the preferred method of search for most users. Given your secretive stance on consumer-facing information, I suppose it would likely be futile for me to request you inform us if a branch moves or, in light of your recent ‘restructuring’ plans, closes.

For the scrollable list, our default position is to sort by distance, however after adding the Dignity branches, user-testing showed that customers were dropping off in unusually high numbers. Upon exit survey, they indicated the prices they were seeing were scarily high. So, given the significant price difference between Dignity branches and the rest of the market, we moved them to the bottom of the list.

The result – happier consumers. We try to show consumers what they want, as verified by the recent CMA findings, which is a combination of geographic proximity and a reasonable price. We could, if necessitated, build an algorithm to automatically sort them in that way, which would result in exactly the same outcome. Unless of course you have massively reduced your prices. Which you are unwilling to evidence to us.

 

A.d. – Wider range of Dignity services

As previously offered, if you provide us with a list of the services you provide at each branch, that correspond to the categories we show consumers, we will happily update them. We only don’t currently show them because you (a) refused to provide them and (b) asked us to hide them. So we did.

Now, should your branches provide additional exciting differentiating services that we don’t currently show consumers; services that you feel it would be in the customer’s interest to see when evaluating funeral directors; then we would certainly consider adding those. Given your track record in innovation to date, my breath shall remain decidedly un-bated.

 

B.a and B.b. – Funeral Plans

Funeral plans and how they are marketed is currently an area of high contention. The following factors play into our view:

  • Funeral plan companies frequently extract charges outside of their administration fee such as fund management fees, third-party commissions and cancellation fees
    • Outside of our £195 we do not charge any of these
  • Funeral plan companies often remove large charges from the fund which is there to pay for funeral directors’ services
    • We do not do this

However, we acknowledge that the funeral plan industry is currently extremely murky and confusing for customers. Personally, I recommend that instead of buying a funeral plan, at least in their current format, consumers keep their money aside in the bank.

Funeral plans have been sold for decades on the back of the fear – and largely thanks to you, the reality – that funeral prices will rise year on year. But now, thanks in part to us, and our determined efforts in bringing transparency to the sector, those prices are falling.

Pleasingly, this sector is now under investigation by the FCA. In terms of the language on that page, although I believe we offer the best-value plan, it’s hard to prove conclusively, so we will adapt it. In fact, we have already.

On this point, my fine knight, you may return to castle Dignity sounding the victory bell and present Lord McCollum with a hard-fought text change as evidence of your battlefield prowess.

I do look forward to your response.

Yours sincerely,

Ian Strang

CEO

Beyond

CMA Report Calls for Price Transparency 0

Many of our regular readers will know by now that the CMA’s interim report landed late last week.

It’s clear from the contents that the government have validated what we’ve all been saying on behalf of families and independent funeral directors for the last few years. Specifically that:

  • The large chains have preyed on bereaved families with excessive price hikes in both funeral director and crematorium fees, as well as failing to provide clarity of ownership.
  • The NAFD has failed consumers, specifically that it has ‘fallen short’ and may have been ‘detrimental to competition’. Particularly that it has taken a position on websites like Beyond that’s ‘ambiguous at best’ and that it risks ‘distorting the market’ by its actions.

We’re delighted that hardworking independent funeral directors who publish their pricing online are going to be rewarded by the CMA, while those who deliberately make their prices difficult to discover are taken to task.

We’ll be doing our part, too. We’ll be supporting all the independent funeral directors signed up to our service so that they can be sure they’re meeting any recommendations from the CMA on comparable price transparency, simply by being on our website. We’ve also got a bundle of free services coming for our partners in the New Year.

If you’re not yet signed up with us, but you’d like to join the thousands of funeral directors on our site who are doing their bit towards price transparency in this industry, why not make an account today? We’d love to have you with us.

There are no monthly fees, and our funeral finance, free wills and estate administration services are there to help you offer the families to help complete, well-rounded support. Simply give us a call on 0800 044 9454 and we’ll get you set up in a matter of minutes, or build your free business profile here.