Thousands of people who had saved up to pay for their funeral risk losing money after the plan provider Safe Hands collapsed into administration.
The restructuring firm appointed to handle the process, FRP, said it was not able to provide immediate refunds to Safe Hands’ 46,000 customers, leading to concerns that pre-bought funerals may not be honored.
For the next fortnight Dignity, one of the UK’s biggest undertakers, had agreed to provide funerals on the company’s behalf. The window will be used by FRP to explore a longer-term solution, such as the transfer of its funeral plans to another company.
On its website, Safe Hands has told customers it is “uncertain that the funeral plans will be able to be fulfilled”. Customers should consider their plan “terminated with immediate effect”, it said. “This includes funeral plans that were part-paid and funeral plans that were being processed. No further direct debit or standing order installations will be collected. “
The funeral selling industry is being overhauled and from this summer any provider will be regulated by the Financial Conduct Authority, a move that will give consumers greater protection.
Based in Wakefield, West Yorkshire, Safe Hands was bought by the private equity firm SHP Capital Holdings two years ago. Tom Gormanly, who joined as chief executive at the time of the deal, resigned earlier this month.
The company failed after severe financial challenges, including the strain caused by the pandemic, left it unsustainable in its current form, FRP said.
“Our immediate focus has been to secure an interim funeral services provision with Dignity for the next 14 days to ensure that any plan-holders that pass away are cared for while we seek to find a longer-term solution,” said Nedim Ailyan, one of the administrators.
“Regrettably, the administration means the company is not in a position to issue refunds at this time. We appreciate how upsetting this period of uncertainty will be. “
FRP said it would carry out a detailed investigation to discover what could be returned to creditors, including policyholders whose money is held in a trust fund, which itself has a shortfall.
“Unfortunately, there is a shortfall between the level of plan holder investments and the forecast level of funeral plan costs to be paid,” said Ailyan. “Essentially, the value of the investments is not enough to meet the funeral plan obligations of the company.”
Customer payments were used to acquire investments, including equities, bonds, cash, real estate and loans. The legal structure was complicated and FRP said it needed to find out which ones could be realized for the benefit of plan holders.
The process of realizing assets and issuing partial repayments to plan holders was a significant undertaking and would take some time to complete, the administrators said. They would be contacting plan holders to explain how they could register a claim. Plan holders and their families can also contact the company’s customer service team on 0800 640 9928.