FPCOB 6.4 Charging for funeral plan distribution
Application
1This section applies to a firm which carries on funeral plan distribution.
1This section does not apply to a funeral plan provider in connection with its entering as provider into funeral plan contracts.
Purpose
- (1)
1The purpose of the rules in this section is to ensure that funeral plan intermediaries act in accordance with the customer’s best interests rule and are not improperly influenced in their funeral plan distribution by payments made, or benefits provided, by funeral plan providers. In particular, the rules in this section prevent a firm from accepting commission from a funeral plan provider.
- (2)
The rules in this section apply whether or not the relevant funeral plan distribution involves the provision of investment advice.
- (3)
Firms should be mindful of the customer’s best interests rule when considering their approach to compliance with the rules in this section.
Requirement to be paid by the customer
- (1)
only be remunerated for its funeral plan distribution (and any other related services provided by the firm) by FP distribution charges; and
- (2)
not solicit or accept (and ensure that none of its associates solicits or accepts) any other commissions, remuneration or benefit of any kind in connection with the firm’s business of engaging in funeral plan distribution or any other related services, regardless of whether it intends to refund the payments or pass the benefits on to the customer or covered individual,
except as provided in this section.
1‘Related service(s)’ for the purposes of FPCOB 6.4.4R includes:
- (1)
communicating or approving financial promotions in relation to a funeral plan contract or regulated funeral plan activity;
- (2)
recommending a funeral plan provider.
1FPCOB 6.4.4R prevents a firm from receiving any monetary or non-monetary benefit either in relation to the distribution of particular funeral plan contracts or in connection with its business of marketing, selling or distributing funeral plan contracts more generally.
Group distribution arrangements
1If the firm’s funeral plan distribution relates to funeral plan contracts entered into by the firm itself or by an associate, the firm must ensure that the level of its FP distribution charge is at least reasonably representative of the services associated with its funeral plan distribution (and related services).
1A firm should consider whether the level of its FP distribution charge meets the requirement of FPCOB 6.4.7R by reference to whether the charge would be appropriate in the context of the service being provided by a firm unconnected with a funeral plan provider.
Guidance on the requirement to be paid by the customer
1FPCOB 12 restricts a firm engaged in funeral plan distribution from accepting payment other than in certain circumstances. FPCOB 12 does not prevent a funeral plan intermediary from receiving an FP distribution charge from a customer as contemplated by this section (see FPCOB 12.4.4R).
1FPCOB 6.3.2R requires a funeral plan intermediary to inform the customer of the amount of any fee payable. That disclosure should include any FP distribution charge payable by the customer.
Payment for funerals
- (1)
1FPCOB 6.4.4R applies to providers of funerals (such as funeral services providers) which engage in funeral plan distribution. However, that rule only restricts the receipt of payments or benefits in connection with the business of engaging in funeral plan distribution.
- (2)
FPCOB 6.4.4R does not prevent a provider of funerals from receiving payment for the provision of a funeral from a funeral plan provider under the terms of a funeral plan contract. For these purposes, it does not matter whether payment for the funeral is received at the time that the customer enters into the relevant funeral plan contract or at any other time thereafter.
1A firm which carries on funeral plan distribution and is also a provider of funerals must ensure that:
- (1)
the level of its FP distribution charge is at least reasonably representative of the cost of the services associated with its funeral plan distribution; and
- (2)
any payments which it receives from a funeral plan provider under a funeral plan contract are reasonably representative of the cost of delivering the relevant funeral.
1A payment is unlikely to be reasonably representative of the cost of delivering the relevant funeral if it is materially greater than the same payment would have been had the relevant firm had no involvement in the sale or distribution of the funeral plan contract.
Training and support
- (1)
training on the funeral plan contracts in relation to which it carries on funeral plan distribution; and
- (2)
appropriate support with complying with its obligations under the regulatory system from a funeral plan provider.
1Any training or support received for the purposes of FPCOB 6.4.14R must be:
- (1)
of a scale and nature that it could not be judged to impair the firm’s compliance with its duty to act honestly, fairly and professionally in the best interests of the customer or covered individual; and
- (2)
reasonable, proportionate and of a scale that is unlikely to influence the firm’s behaviour in any way that is detrimental to the interests of any relevant customer or covered individual.
1The rules in this section do not preclude a funeral plan intermediary from receiving from a funeral plan provider any materials necessary for the funeral plan intermediary to engage in its business of funeral plan distribution. This may include the product information for the purposes of FPCOB 9.
Payments to employees
Record keeping
1A firm must keep a record of the FP distribution charges paid by each customer.