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FPCOB 6.1 General requirements for firms

Application

FPCOB 6.1.1 R

1This chapter applies to:

  1. (1)

    a funeral plan intermediary; and

  2. (2)

    a funeral plan provider in relation to the distribution of its own funeral plan contracts.

Interaction with the customer’s best interests rule and Principle 7

FPCOB 6.1.2 G

1To comply with the customer’s best interests rule and Principle 7 (Communications with clients), a firm should consider the information needs of the customer and, if different, the covered individual, including:

  1. (1)

    what a customer and/or covered individual needs in order to understand the relevance of any information provided by the firm; and

  2. (2)

    the point in the sales process at which information will be most useful to the customer to enable them to make an informed decision.

Status disclosure: general information provided by firms

FPCOB 6.1.3 R

1In good time before a customer enters into a funeral plan contract:

  1. (1)

    a firm must provide the customer with at least the following information:

    1. (a)

      its identity, address and whether it is a funeral plan intermediary or a funeral plan provider;

    2. (b)

      the appropriate statutory status disclosure statement (see GEN 4);

    3. (c)

      the fact that it is included in the Financial Services Register and the means for verifying this;

    4. (d)

      whether it provides a personal recommendation about the funeral plans offered or information;

    5. (e)

      whose funeral plans it offers;

    6. (f)

      the procedures allowing customers and other interested parties to register complaints about the firm with the firm and the Financial Ombudsman Service or, if the Financial Ombudsman Service does not apply, information about any out-of-court complaint and redress procedures available for the settlement of disputes between the firm and its customers; and

  2. (2)

    a funeral plan intermediary must also provide the customer with the following information:

    1. (a)

      whether it has a direct or indirect holding representing 10% or more of the voting rights or capital in a given funeral plan provider;

    2. (b)

      whether a given funeral plan provider or its parent undertaking has a direct or indirect holding representing 10% or more of the voting rights or capital in the firm; and

    3. (c)

      whether it is representing the customer or is acting for and on behalf of the funeral plan provider.

Scope of service: funeral plan intermediaries

FPCOB 6.1.4 R
  1. (1)

    1Where a funeral plan intermediary proposes or advises on a funeral plan contract then in good time before the conclusion of a funeral plan contract and, if necessary, on its amendment, a funeral plan intermediary must provide the customer with at least information on whether the firm:

    1. (a)

      gives a personal recommendation, on the basis of a fair and personal analysis of funeral plans available in the market; or

    2. (b)

      is under a contractual obligation to conduct funeral plan distribution exclusively with one or more funeral plan providers, in which case it must provide the names of those funeral plan providers; or

    3. (c)
      1. (i)

        is not under a contractual obligation to conduct funeral plan distribution exclusively with one or more funeral plan providers; and

      2. (i)

        does not give a personal recommendation on the basis of a fair and personal analysis of funeral plans available in the market;

      in which case it must provide its customer with the name of those funeral plan providers with which the funeral plan intermediary may and does conduct business.

FPCOB 6.2 Means of communication to customers

Application

FPCOB 6.2.1 R

1This section applies to all information required to be provided to a customer in this chapter and in other chapters or sections where stated.

Means of communication to customers: non-telephone sales

FPCOB 6.2.2 R
  1. (1)

    1A firm must communicate information to a customer using any of the following:

    1. (a)

      paper; or

    2. (b)

      a durable medium other than paper; or

    3. (c)

      a website (where it does not constitute a durable medium) where the website conditions are satisfied.

  2. (2)

    The firm must communicate the information in (1):

    1. (a)

      in a clear and accurate manner, comprehensible to the customer;

    2. (b)

      in English or in any other language agreed by the parties; and

    3. (c)

      free of charge.

FPCOB 6.2.3 R

1Where the information is communicated using a durable medium other than paper or by means of a website, the firm must, upon request and free of charge, also send the customer a paper copy.

FPCOB 6.2.4 R

1A firm must ensure that a customer’s choice or consent to receive the information by means of a website (whether a durable medium or where the website conditions are satisfied) is an active and informed choice or consent.

FPCOB 6.2.5 G
  1. (1)

    1For the purposes of FPCOB 6.2.4R, for example, an option to allow a change to the e-mail address to be used or an option to allow information to be provided by means of a website should be presented in a way that is clear, fair and not misleading.

  2. (2)

    The following are examples of circumstances not evidencing active or informed choice or consent:

    1. (a)

      a pre-ticked box (suggesting that option has been selected) which appears in a more prominent place than an un-ticked box allowing another option to be selected; and

    2. (b)

      the customer electing to be informed by a website without being first given other options.

Means of communication to customers: telephone sales

FPCOB 6.2.6 R

1In the case of telephone selling:

  1. (1)

    the information must be given in accordance with the distance marketing disclosure rules (see FPCOB 5); and

  2. (2)

    if prior to the conclusion of the contract the information is provided orally, the firm must also provide the information to the customer in accordance with FPCOB 6.2.2R immediately after the conclusion of the funeral plan contract.

FPCOB 6.3 Fee disclosure

Application

FPCOB 6.3.1 R

1This section applies to a firm that imposes a fee in connection with a funeral plan or its regulated funeral plan activity.

Fee disclosure

FPCOB 6.3.2 R
  1. (1)

    1Where a fee is payable, the firm must inform its customer of the amount of the fee.

  2. (2)

    The information in (1) must be given before the customer incurs liability to pay the fee, or before entering into the funeral plan contract, whichever is earlier.

FPCOB 6.3.3 R

1The fee disclosure requirement extends to all such fees that may be charged in connection with a funeral plan or the firm’sregulated funeral plan activity.

FPCOB 6.4 Charging for funeral plan distribution

Application

FPCOB 6.4.1 R

1This section applies to a firm which carries on funeral plan distribution.

FPCOB 6.4.2 G

1This section does not apply to a funeral plan provider in connection with its entering as provider into funeral plan contracts.

Purpose

FPCOB 6.4.3 G
  1. (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. (2)

    The rules in this section apply whether or not the relevant funeral plan distribution involves the provision of investment advice.

  3. (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

FPCOB 6.4.4 R

1A firm must:

  1. (1)

    only be remunerated for its funeral plan distribution (and any other related services provided by the firm) by FP distribution charges; and

  2. (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.

FPCOB 6.4.5 R

1‘Related service(s)’ for the purposes of FPCOB 6.4.4R includes:

  1. (1)

    communicating or approvingfinancial promotions in relation to a funeral plan contract or regulated funeral plan activity;

  2. (2)

    recommending a funeral plan provider.

FPCOB 6.4.6 G

1 FPCOB 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

FPCOB 6.4.7 R

1If the firm’sfuneral 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).

FPCOB 6.4.8 G

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

FPCOB 6.4.9 G

1 FPCOB 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).

FPCOB 6.4.10 G

1 FPCOB 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

FPCOB 6.4.11 G
  1. (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. (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.

FPCOB 6.4.12 R

1A firm which carries on funeral plan distribution and is also a provider of funerals must ensure that:

  1. (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. (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.

FPCOB 6.4.13 G

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

FPCOB 6.4.14 R

1A firm may receive:

  1. (1)

    training on the funeral plan contracts in relation to which it carries on funeral plan distribution; and

  2. (2)

    appropriate support with complying with its obligations under the regulatory system from a funeral plan provider.

FPCOB 6.4.15 R

1Any training or support received for the purposes of FPCOB 6.4.14R must be:

  1. (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. (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.

FPCOB 6.4.16 G

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

FPCOB 6.4.17 G

1The rules in this section do not prevent an employee of a firm receiving payment from that firm.

Record keeping

FPCOB 6.4.18 R

1A firm must keep a record of the FP distribution charges paid by each customer.

FPCOB 6.5 Payments to funeral plan intermediaries

Application

FPCOB 6.5.1 R

1This section applies to a funeral plan provider.

Requirement not to offer commissions

FPCOB 6.5.2 R

1A firm must not offer or pay (and must ensure that none of its associates offers or pays) any commissions, remuneration or benefit of any kind to:

  1. (1)

    another firm in connection with that firm’s business of engaging in funeral plan distribution;

  2. (2)

    another person in connection with:

    1. (a)

      that person’s business of engaging in funeral plan distribution:

      1. (i)

        for which it does not require authorisation; or

      2. (ii)

        which it carries on in breach of the general prohibition;

    2. (b)

      business of that person which would involve engaging in funeral plan distribution but for an exclusion in the Regulated Activities Order;

    3. (c)

      that person’s business of introducing customers to another person in relation to funeral plan contracts;

  3. (3)

    a person in (1) or (2) in relation to any related services; or

  4. (4)

    any third party for the benefit of a person, and in the circumstances described, in (1) to (3),

except as provided in this section.

FPCOB 6.5.3 R

1 FPCOB 6.5.2R does not apply to training or support which meet the requirements of FPCOB 6.4.14R and FPCOB 6.4.15R.

FPCOB 6.5.4 G

1 FPCOB 6.5.2R prevents a funeral plan provider from making payments, or offering benefits, to persons involved in distributing the firm’sfuneral plan contracts. This includes payments made, or benefits offered, to a firm’sappointed representatives.

FPCOB 6.5.5 R

1 FPCOB 6.5.2R does not prevent a funeral plan provider from making payments to a person2 merely to communicate a financial promotion.

Payments to employees

FPCOB 6.5.6 G
  1. (1)

    1The rules in this section do not apply to payments made by firms to their employees in relation to sales activity.

  2. (2)

    Firms should refer to SYSC 19F and the FCA’s final guidance, ‘Risks to customers from financial incentives’ (January 2013) when considering the structure of any incentive schemes for their employees.

    [Note: see https://www.fca.org.uk/publication/finalised-guidance/fsa-fg13-01.pdf]