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You are viewing the version of the document as on 2023-01-04.

FPCOB 2.1 General principles

Application

FPCOB 2.1.1 R
  1. (1)

    1This section applies to a firm in relation to its regulated funeral plan activity.

  2. (2)

    This section applies in relation to a firm’scustomers under subsisting funeral plans, unless otherwise stated.

The customer’s best interests rule

FPCOB 2.1.2 R

1A firm must act honestly, fairly and professionally in accordance with the best interests of:

  1. (1)

    its customer; and

  2. (2)

    if different, the covered individual.

Exclusion of liability

FPCOB 2.1.3 R

1A firm must not seek to exclude or restrict, or rely on any exclusion or restriction of, any duty or liability it may have to a customer or covered individual unless it is reasonable for it to do so and the duty or liability arises other than under the regulatory system.

FPCOB 2.1.4 G

1The general law, including the Unfair Terms Regulations (for contracts entered into before 1 October 2015) and the CRA, also limits the scope for a firm to exclude or restrict any duty or liability to a consumer.

Reliance on others

FPCOB 2.1.5 G
  1. (1)

    1Where it is compatible with the nature of the obligation imposed by a particular rule, including the customer’s best interests rule, and with the Principles, in particular Principles 1 (Integrity), 2 (Skill, care and diligence) and 3 (Management and control), firms may rely on third parties in order to comply with the rules in this sourcebook.

  2. (2)

    For example, where a rule requires a firm to take reasonable steps to achieve an outcome, it will generally be reasonable for a firm to rely on information provided to it in writing by an unconnected authorised person or a professional firm, unless it is aware or ought reasonably to be aware of any fact that would give reasonable grounds to question the accuracy of that information. However, a firm cannot delegate its responsibility under the regulatory system. For example, where a rule imposes an absolute obligation (such as the requirement on a funeral plan provider in FPCOB 14.1.4R regarding the services required for a funeral plan contract) although a firm could use outsourcing arrangements to fulfil its obligation, it retains regulatory responsibility for achieving the outcome required.

Record keeping

FPCOB 2.1.6 G
  1. (1)

    1This sourcebook, other than FPCOB 4, FPCOB 6.4.18R, FPCOB 152and FPCOB 162, does not generally have detailed record-keeping requirements: firms will need to decide what records they need to keep in line with the high-level record-keeping requirements and their own business needs.

  2. (2)

    In order to deal with requests for information from the FCA, as well as queries and complaints from customers and covered individuals, firms may require evidence of matters such as:

    1. (a)

      the reasons for personal recommendations;

    2. (b)

      what documentation has been provided to a customer or covered individual; and

    3. (c)

      how redemptions have been settled and why.

  3. (3)

    A firm may be subject to record-keeping requirements elsewhere in the FCA Handbook, including in:

    1. (a)

      the Training and Competence sourcebook (TC) (see TC 3.1.1R);

    2. (b)

      the Senior Management Arrangements, Systems and Controls sourcebook (SYSC) (see SYSC 9.1.1R, SYSC 10.1.6R and SYSC 28A.3.1R); and

    3. (c)

      chapter 7 of the Product Intervention and Product Governance sourcebook (PROD) when manufacturing or distributing a funeral plan product.

FPCOB 2.2 Inducements

FPCOB 2.2.1 G
  1. (1)

    1Principle 8 requires a firm to manage conflicts of interest fairly, both between itself and its customers and between a customer and another client. This principle extends to soliciting or accepting inducements where this would conflict with a firm’s duties to its customers. A firm that offers such inducements should consider whether doing so conflicts with its obligations under:

    1. (a)

      Principles 1 and 6 to act with integrity and treat customers fairly; and

    2. (b)

      the customer’s best interests rule.

  2. (2)

    An inducement is a benefit offered to a firm, or any person acting on its behalf, with a view to that firm, or that person, adopting a particular course of action. This can include, but is not limited to, cash, cash equivalents, commission, goods, hospitality or training programmes.

  3. (3)

    Firms should also refer to the rules on charging for funeral plan distribution and payments to funeral plan intermediaries (FPCOB 6.4 and FPCOB 6.5).

FPCOB 2.3 Customers with a payment shortfall

Application

FPCOB 2.3.1 R

1This section applies to a funeral plan provider dealing with a customer that has:

  1. (1)

    an instalment payment funeral plan entered into on or after 29 July 2022; and

  2. (2)

    a payment shortfall in relation to that instalment payment funeral plan.

FPCOB 2.3.2 G

1In relation to a subsisting funeral plan, a funeral plan provider should deal with customers fairly and, as far as possible, in a manner that is compatible with the customer’s best interests rule.

Purpose

FPCOB 2.3.3 G

1This section amplifies Principle 6 (Customers’ interests) in respect of the information and service that firms should provide to customers who have payment difficulties or shortfalls.

Dealing fairly with customers with a payment shortfall

FPCOB 2.3.4 R

1The firm must deal fairly with the customer in relation to the payment shortfall.

FPCOB 2.3.5 R

1Where the customer has a payment shortfall of 2 consecutive payments, the firm must, as soon as possible, and in any event within 5 business days of the second missed payment, provide the customer with a statement in a durable medium of:

  1. (1)

    the individual payments due;

  2. (2)

    the total amount of the payment shortfall; and

  3. (3)

    information on the consequences and potential consequences under the funeral plan contract, if the payment shortfall is not settled within 10 business days of the date of the customer communication.

FPCOB 2.3.6 R

1The firm must allow the payment shortfall to be settled within 10 business days of the date of the communication, without penalty.

FPCOB 2.3.7 R

1The firm must not impose a fee on the customer for incurring or correcting the payment shortfall.

FPCOB 2.3.8 R

1The firm must not cancel the funeral plan contract on the basis of a payment shortfall unless:

  1. (1)

    The customer:

    1. (a)

      has a payment shortfall of at least 2 consecutive payments; and

    2. (b)

      has failed to settle the payment shortfall in accordance with the terms of the statement provided by the firm for the purposes of FPCOB 2.3.5R; or

  2. (2)

    FPCOB 13.2.3R applies.

FPCOB 2.3.9 R

1If the firm does not cancel the funeral plan contract on the basis of a payment shortfall, it must provide the customer with a further statement in accordance with the requirements of FPCOB 2.3.5R following each further consecutive missed payment.

FPCOB 2.3.10 R

1A firm’s obligation to maintain insurance arrangements in accordance with FPCOB 3.1.8R continues despite any payment shortfall.