Have you got an unregulated funeral plan?

Do you pay into a funeral plan? Many foreigners living in Spain have a plan that is pre-paid and includes details of how and where they would like their funeral to take place. Recent news has shone light on the vulnerability of some of these plans. We provide our advice for if you have one or if you are considering taking one out.

When you live in a different country to your nationality you can feel anxious about ensuring that your plans for the future are properly made. This includes planning your funeral. In Spain, once someone has died, the funeral takes place very quickly leaving little time for arrangements to be made. This is particularly an issue if you wish to fly relatives over to be present and don’t want those you leave behind to be left with costly fees for putting your wishes into action.

Recently, there have been reports of Iberian Funeral Plans – a pre-paid funeral planning service, may have stopped operating. There is still some uncertainty around the details of this but suffice to say, it raises issues about the legality and safety of some of those selling these plans.

On behalf of those who have been affected, we offer our sympathy. People entered into these arrangements in good faith. Although we are still gathering details, we want to take this opportunity to guide you in choosing a plan provider.

Regulated funeral providers

If your funeral plan was purchased through a regulated provider or an insurance company there is no need to worry. Regulated funeral plan providers are overseen by the Financial Conduct Authority (FCA) and operate under official authorization and oversight in the UK. This ensures that your funds are protected by the Financial Services Compensation Scheme (FSCS). This scheme covers up to £85,000 in UK bank accounts, guaranteeing either an equivalent funeral plan or financial reimbursement at current market value if a provider were to fail.

Funeral or death insurance policies

For those who hold funeral or death insurance policies, Spanish law also includes safeguards to protect policyholders in the event of an insurance company’s insolvency.

A key protective measure is the Consorcio de Compensación de Seguros (CCS), a public institution under the Ministry of Economy and Business. The CCS functions as a guarantee fund, stepping in to cover the outstanding obligations of insolvent insurers. If an insurance company becomes insolvent, the CCS ensures that policyholders receive compensation for claims covered by their policies.

Unfortunately, unregulated funeral plans do not provide these guarantees, putting customers at risk of the financial loss of their investment if the company goes bankrupt.

How to check if they are regulated

If you’re not sure whether your funeral plan provider is registered you can check with the Financial Conduct Authority (FCA) for a UK based provider.The FCA will usually display the provider’s details on their official website, so you can verify their registration by searching https://register.fca.org.uk/s/. In other countries there are equivalent regulators such as the Insurance Regulatory Authorities or Funeral Industry Regulators depending on local laws.

It is also likely that your funeral plan provider, if correctly registered, will display this on their own website and in their promotional materials. Checking membership in industry associations and asking the provider directly are also reliable ways to confirm regulation status.

In Spain you can check if an insurance company is registered with the Directorate General of Insurance and Pension Funds on the following link: https://dgsfp.mineco.gob.es/es/Entidades/Paginas/rrpp.aspx

Advice if you have an unregulated funeral plan

If you hold a funeral plan with Iberian Funeral Plans or any other provider who is not regulated, we highly recommend taking swift action to safeguard your arrangements and being aware of the product you have contracted and the risks involved.

Cab Spain https://www.citizensadvice.org.es/  is currently studying the case of Iberian Funeral Plans in order to see if they can recover some of the money from what is a rather complicated case. At Ábaco we are happy to assist if you are looking for a new funeral plan or death insurance and want to make sure that the one you choose is correctly registered and there to meet your future needs.