Our Down to Earth team has submitted detailed responses to three Competition and Markets Authority (CMA) consultative working papers, on possible price controls for funeral directors and crematoria, and on local authorities facilitating access to funeral services.
The CMA's investigation into the funeral industry continues, though the statutory deadline for its completion has been extended by six months, to 27 March 2021, partly owing to the coronavirus pandemic. This month QSA's Down to Earth team has responded to CMA working papers on three key aspects of its investigation:
- Options for regulating the price of funeral director services at the point of need
- Options for regulating the price of crematoria services
- Options for local authorities to give local residents access to funeral services at a pre-agreed fixed price, through arrangements with funeral directors.
The CMA stresses that it is still assessing whether or not there are "adverse effects on competition" (AECs) within the funeral industry, and any adverse effects on customers, that would require any of these remedies. However in 2018 the CMA stated that “Its initial work indicates problems with the market that have led to above inflation price rises for well over a decade – both for funeral director services and crematoria services. The scale of these price rises does not currently appear to be justified by cost increases or quality improvements.”
QSA awaits the CMA's final assessment of whether there are adverse effects upon customers, but we feel the scale of funeral poverty, combined with the upward trend in funeral prices, shows that there is a problem: Royal London’s latest figures (for 2019) estimate that the average funeral cost now stands at £3,785, that 12% of people faced with a funeral struggle to pay for it, and that people in this group take on an average debt of £1,990. This is in the context of the essential elements of funeral prices having increased by 6% each year – twice the inflation rate – for the last 14 years, as observed by the CMA in 2019 when it launched its full investigation into the funeral industry.
QSA's response to the CMA's working papers draws upon its frontline evidence (anonymised) from Down to Earth's casework in supporting people who are struggling with funeral costs.
Regulating the price of funeral director services
- QSA is very supportive of constraining the price of funerals, and argues that cemetery services also need to be included in price controls. We have some concerns that price controls could lead more funeral directors to require all payment before the funeral takes place.
- The CMA is considering the option of introducing price controls on a defined ‘benchmark’ package of funeral products and services. QSA would be more supportive of a price cap on the essential services that all customers require when purchasing a funeral, plus caps on add-ons that are generally required.
- Having said this, if a benchmark package is introduced as a price control mechanism, we urge careful use of language: having a ‘standard’ package could strengthen perceptions of what a funeral ’should’ be and of what bereaved people are ‘expected’ to provide for their loved ones. We believe the package should not be described as ‘standard’ or anything else that makes it sound like ‘the norm’.
Regulating the price of crematoria services
QSA believes that price controls should be implemented on crematoria services, and again urges that cemetery prices should be included in the controls; in some areas of the country, cemetery charges often constitute the largest portion of a funeral bill.
In view of the huge increase in cremation fees over the last decade or so, we share the CMA's concern that basing price caps on current industry pricing information "could be seen as validating a particular price level and could become a focal point for the rest of the market."
- Again, if price controls are introduced on a benchmark package of crematoria services, it should be made clear that the package is just one option and that other options exist, including those that are less expensive.
"If the proposed ‘benchmark’ package of funeral products and services were to be introduced as a price control, it would be vital to be very clear to consumers that they can choose to have something different, including funeral arrangements with fewer products and services and a lower overall cost."
Lindesay Mace, Acting Manager, Down to Earth
Local authority involvement
- QSA would welcome the wider introduction of low cost funeral schemes whereby local authorities undertake competitive tendering of funeral services and agree a fixed price which local customers then pay to funeral directors, as a respectful and affordable option.
- We would want to see availability of such schemes consistently across the UK, rather than a patchy, postcode lottery situation.
- Local authority facilitated funeral schemes need to be properly advertised, and again tone and language is important to ensure that customers perceive them as an 'acceptable' option.
QSA's other 2020 responses to the CMA, and the way ahead
Back in February, Down to Earth had also submitted detailed responses to two other CMA working papers which covered possible quality regulation remedies to be applied to funeral directors, and possible measures around funeral industry transparency towards customers. Regarding quality regulation, QSA urged the CMA to include ‘front of house’ services i.e. care of the bereaved in quality standards, not only ‘back of house’ operations i.e. care of the deceased. We urged the CMA to back up quality standards with other features which it is considering, namely a licensing scheme for funeral directors accompanied by an independent regime of inspection and enforcement measures, a clear way of communicating key information to customers in the form of a ratings scheme, and an independent adjudicator of complaints.
Responding to the CMA’s paper on information and transparency remedies, with its prominent focus on funeral pricing, QSA expressed strong support for requiring funeral directors to display clear prices and argued that terms of business, for example size of deposit payable and when/how the balance is to be paid, must also be made clear. This is in line with the requirements of QSA’s existing Fair Funerals pledge, which QSA originally launched in 2015 to address the lack of price transparency in the funeral industry and the problems bereaved people face in comparing prices at an emotionally difficult time.
The next key milestone in the CMA's funerals market investigation will be the publication of its provisional decision report in July/August 2020. After this there will be a further opportunity to take part in consultation, before the CMA's final report in March 2021.
QSA commends the CMA's purposeful approach to this investigation to date, and hopes that the action being considered by the CMA can play an important part in ending funeral poverty.