Funeral Services (Hansard, 17 December 1997)

§ Mr. David Chidgey (Eastleigh)
On a point of order, Mr. Deputy Speaker. I seek your advice. What happens when an hon. Member is ready to make a speech but the Minister is not present? Is there any point in continuing without a Minister?

§ Mr. Deputy Speaker (Mr. Michael Lord)
The Standing Orders of the House are quite clear: we do exactly what we have just done.

§ Mr. Chidgey
I will make my remarks and hope that someone will respond to them in due course.
I am grateful for this opportunity to raise a matter that is causing widespread concern—namely the lack of regulation of the provision of funeral services. That concern is felt by the users of the services, who are the relatives of the deceased, and by the providers of the services, the funeral directors themselves. It is also now felt by charity workers who find themselves involved in selling prepaid funeral plans on commission for their charities. There is also concern in the financial services sector which finds that prepaid plans are being sold in the same way as financial services but without any statutory control.
I will speak for only about 10 minutes because I know that the Minister—who is not in his place—is keenly aware of the issue and I want to leave him as much time as possible to outline his proposals.

§ The Minister for Competition and Consumer Affairs (Mr. Nigel Griffiths)
The Minister is in his place. Perhaps the hon. Gentleman would like to tell the House whether the account in the Evening Standard, to the effect that he has already raised the issue in the House, is accurate. It is not customary to use the past tense; hon. Members usually make a speech first and then issue a press release.

§ Mr. Chidgey
I am sure that I can resolve the confusion after I have finished my speech. I apologise for not recognising that the Minister was in his place; there was some confusion due to his late arrival.
One of the main causes of concern is cold calling by telephone—for instance, selling memorial plaques months after a cremation has taken place but while the bereaved are still suffering the trauma of losing a relative. The Mail on Sunday featured the case of Christine Hall from East Sussex, who received a mail shot advertising a prepaid funeral service. A few days after she had thrown it away, she received a telephone call from a charity which wanted to know whether she had received the literature it had sent her and whether she was interested in buying such a plan. She was asked whether she had booked a burial plot for herself and her husband and told that if she had not she should do so quickly. Christine is 62 and was upset by the timing of the call—and rightly so, as her husband Henry is 89 and seriously ill. It was a traumatic experience for them.
298 The Daily Mirror reported the case of Vanessa Rylance from Birkenhead, a woman whose 77-year old mother was diagnosed as having cancer. Days after her mother had left hospital, Vanessa received a hard-sell letter suggesting that she take out a plan to cover her death.
I will deal now with the concerns of the providers—the traditional, family-run funeral firms. It is now common knowledge that funeral provision is big business, and multinational organisations are moving into the market. In fact, some 25 per cent. of the business was bought by one company, which led to the involvement of the Monopolies and Mergers Commission. In due course, that company was required to make some divestments to bring it within the regulations.
There is a lack of transparency about the ownership of funeral firms. As the Minister will know, there is a requirement for owners of a company to make their names and interests clear. When family businesses are bought out, there are far too many instances of the old name still appearing over the door of the funeral parlour; it is not until one goes into the back room that one finds a small plaque revealing the true owners of the firm.
There is also a lack of transparency in the prices. Far too often, people telephone funeral directors and receive a low quote, but the full price is not made clear. Once they get into the parlour, they are persuaded to spend far more on the funeral than they intended. The price quoted is the price of the funeral alone and does not include the cost of the burial plot, the church service, a book of remembrance, which is apparently becoming the vogue, or the headstone. There are disturbing cases of headstones being offered at a price way above that which would be charged if one went directly to the stonemason. In addition, plots rented in a crematorium have a habit of increasing in price over the years until the rents are far greater than was ever imagined.
There is also concern about mergers in the funeral business. Many family firms are being merged into international corporations, leading to lack of choice and competition. If one organisation owns the funeral parlours, crematoriums and cemeteries and provides the prepayment plans, that clearly means the removal of choice and a reduction of competition. The most worrying development, however, is that the same firms are now winning contracts for NHS bereavement services.
National health service hospitals are now in the business of contracting out those services that are not considered core health services—one of which is the bereavement service. Hospitals are putting the provision of such services out to tender, and it is understood that in one case a firm has offered to provide the service at a zero price. Why should anyone provide a service for nothing? Unfortunately, a large hospital can expect hundreds—perhaps even a thousand—deaths per year, and that number of funerals is big business.
It is very difficult for a bereaved relative or the relative of someone who is dying to distinguish between a bereavement counsellor, who is a trained psychologist and understands the effect of trauma, and a bereavement officer employed by a huge corporation whose main objective is to sell funerals.
My final and most important point relates to the marketing, selling and management of prepaid funeral plans. There has been some unfortunate negative publicity in the press about the selling of such plans by a firm called 299 SCI, an American funeral giant which is an offshoot of Age Concern. Age Concern is a highly respected charity which does a great deal of good work. It aspires to raise standards and introduce quality into the provision of funeral services.
Age Concern is a highly commendable charity, but it is impossible for an organisation to control the activities of over-zealous salesmen at the point of sale, and there are too many cases of elderly people suffering distress when subjected to the hard-sell approach. That distress is keenly felt by the charity workers. Negative publicity works against charitable aims, and I hope that Age Concern will be reviewing that aspect of the matter very carefully. Locking in prepaid funeral plans to one provider of funeral services is fundamentally anti-competitive. Anyone purchasing such a plan is obliged to use SCI-owned funeral parlours, so the plans limit choice and remove competition.
About £250 million is now invested in prepaid funeral plans, and there seems to be no regulation of the management of the funds thus amassed and no provision for purchasers to benefit from the profits accrued by those investments. The plans seem to be totally free of the requirements applying to other financial services under the financial services legislation.
Two years ago, the Office of Fair Trading recommended regulation of the funeral services industry. I understand that one of the Minister's colleagues is keenly interested—

§ Mr. Ivor Caplin (Hove)
The hon. Gentleman will be aware of my interest in regulation, because I wrote to him last week when he secured this debate. In his reply to me, he said that he could not allow me any time in the 15 minutes allotted for his speech because of the many Opposition Members who wished to speak in the debate. Where are they?

§ Mr. Chidgey
That was a spurious intervention. The point that I made to the hon. Gentleman—in a private letter which was written with the best of intentions—was that many hon. Members had asked to speak in this debate and I felt that it was only fair to say no to them all or there would be insufficient time for me to say what I hoped to say in 10 minutes, thereby allowing the Minister ample time to reply. That point should have been well taken by the hon. Gentleman.
I understand that the Minister's colleagues are well aware of the issue. When in opposition, the Government stated that they would examine the matter very soon after coming to power. I hope that the Minister has come today with some firm proposals and a timetable for legislation to regulate provision of funeral services, and in particular to deal with the issue of transparency of ownership of funeral parlours, crematoria and cemeteries, so as to maintain choice, competition and quality.
I hope especially that the Government have proposals to draw a clear line between NHS hospitals' bereavement counselling services and contracted-out bereavement services—which is really just another name for the commercial opportunity provided for large funeral directors to access markets for thousands of funerals.
300 I hope also that the Minister has proposals to regulate prepaid funeral plans so that investors in those plans, like investors in other schemes, will be covered by the Financial Services Act 1986.
I apologise to the Minister for not recognising him at the start of the debate, but I thought that the matter was the responsibility of one of his colleagues.

§ The Minister for Competition and Consumer Affairs (Mr. Nigel Griffiths)
I am very grateful to the hon. Member for Eastleigh (Mr. Chidgey) for the opportunity that he has given to the House to review this important issue. I welcome also the keen interest taken by my hon. Friend the Member for Hove (Mr. Caplin) in the funeral industry and in the problems that people may face when dealing with it. With more than 600,000 funerals organised every year in Britain, the subject touches the lives of millions of relatives.
People tend to use funeral directors at a time of maximum stress, and at such a vulnerable time it is important that they should receive proper protection. Fortunately, British funeral directors have a very long tradition of consoling relatives and of organising funerals with all the care and attention that is so important at that time. I want the high values that traditional British funeral directors have long upheld to be maintained. Some family firms have seen those values passed down through generations.
Almost three years ago, in 1995, the Office of Fair Trading reviewed the United Kingdom funeral business. The then Director General of Fair Trading, Sir Bryan Carsberg, said: the vast majority of those in business are honest, competent and concerned to meet consumers' needs responsibly. That is as true today as it was then. However, Sir Bryan also warned of the risks facing the public from dishonest or incompetent funeral directors—who are only a tiny minority. He said, however, that the risks are significant.
It took the previous Government more than 12 months to consider Sir Bryan's report. They started consultation last year, but the findings were never published or shared with the public; they were—if the House will forgive the pun—buried.
On 7 May 1997, shortly after the general election, I met the new Director General of Fair Trading, John Bridgeman. We discussed, among other things, the 1995 report. I asked officials at the Department of Trade and Industry to examine the issue afresh and to report to me the options open to the new Government.
I have contacted all the main funeral trade associations, asking them what action they are taking to ensure that people who buy funeral plans are fully protected.

§ Mr. Chidgey
Will the Minister perhaps clarify when he will be able to reach a conclusion on the recommendations made to him by his officials?

§ Mr. Griffiths
On 1— December 1997, I responded to a parliamentary question tabled by the hon. Gentleman. We appreciate the concerns that have been expressed about the issue, and we hope to reach a conclusion as early in the new year as possible.
301 Because of previous inaction, it is very important that the director general's report on action to deal with findings that are now more than three years old should be updated so that we do not try to take action against problems which have changed. I do not believe that problems no longer exist—we know that they do—but we should take that important opportunity to update our knowledge of the situation.

§ Mr. Caplin
In my hon. Friend's deliberations with officials and industry, will the establishment an independent ombudsman service be considered so that real consumer protection can be provided to those about whom the hon. Member for Eastleigh (Mr. Chidgey) is so concerned?

§ Mr. Griffiths
My hon. Friend is a great advocate of such a service, which he asked me about on 1 December. As I said then, I would certainly welcome the emergence of an independent scheme to protect consumers.
To avoid creating any doubt among those who provide funerals—funeral directors and prepayment plan providers—I have written to the main trade organisations asking what action they are taking to ensure that people who buy funeral plans are fully protected. I am seeking confirmation that in the case of prepaid funeral plans there is a binding obligation on the funeral director to perform the contract irrespective of any payment that the funeral director receives from the plan provider, and that that obligation is enforceable by the plan holder or his or her estate.
There are therefore three parties to the agreements: the person who takes out a contract, or his or her relative; the plan provider, who initially receives the money; and the person—the funeral director—who will provide the funeral. I am investigating whether, as I hope, the funeral director has a binding agreement with the person who has paid for the plan. It is up to funeral directors to ensure that they receive the money from the plan provider.

§ Mr. Chidgey
I draw the Minister's attention to plan providers—the person or organisation with whom the money is invested. I am concerned to hear the Minister's proposals for regulation of the sums involved, which are now considerable. Has he—from his deliberations and discussions—anything more to offer on regulation?

§ Mr. Nigel Griffiths
I certainly hope to be able to offer the hon. Gentleman the plans. That was the exact subject of his previous helpful intervention, to which I replied. It goes to the core of the issues that are being considered and I shall make an announcement in due course and in the appropriate way. I can reassure the hon. Gentleman that we are looking into that matter.
In the meantime, so that the House does not think that the Government are not taking the firmest possible action to reassure people, we have been in touch with the funeral trade associations proposing how they should fulfil their contracts and asking them for assurances that funeral directors will honour their contract with the relative or bereaved person in respect of the plan provider. Naturally, the major plan providers are companies of considerable repute. It is important that the funeral director is aware that he or she has a contract with the person who has taken out the plan and that he can recover the money from 302 the plan provider. If that is not the case, I am seeking their confirmation that, in any case, they are obliged to carry out the funeral.
The hon. Gentleman rightly touched on other matters of concern, including marketing practices. I have written to the Advertising Standards Authority asking whether it is taking action to ensure that any or all such advertising fully complies with its code. The hon. Gentleman mentioned a charity. Where plan providers are linked to a charity, I have asked the Charity Commission to advise on whether there is any abuse or malpractice.
The hon. Gentleman raised two specific cases involving Age Concern. I received a letter from Age Concern giving its side of the story. In the first case that he mentioned, the newspaper article suggests that the person was the recipient of an unsolicited mailing. Age Concern tells me that its records show that she responded to an information leaflet about the Age Concern funeral plan carried in My Weekly, that she requested a brochure with further information and was telephoned to check whether she required more information. There was no question of a hard sell of a plot and the conversation ended amicably.
In the second case, a different newspaper report suggested that the person had received an unsolicited mailing about a funeral plan shortly after being diagnosed with cancer. I understand that that person was initially mailed as an existing Age Concern insurance customer and subsequently received an information pack about the Age Concern funeral plan. We have been informed by the charity that of course she will not receive any follow-up mailing. Age Concern apologised if she or her family were upset. However, the charity informs me that it has received no direct complaint from the person to whom the hon. Gentleman referred or from her family. The problem that we all face as responsible right hon. and hon. Members and Ministers is that if an hon. Member raises two cases which, for all the sensationalism that there may have been in newspaper reports, do not appear to stand up, it is important—and I urge all hon. Members to do so—either to correct the account that we have received from a highly responsible charity or to provide other cases. My door is never shut to cases of abuse of the nature that was alleged in the newspaper article.

§ Mr. Chidgey
I certainly endorse what the Minister has said. I have met the chief executive of Age Concern and I know the sincerity of that charity's approach. My point was not in respect of the merits of the cases; I was drawing attention to the fact that, whether or not the publicity was accurate, it still occurred. I am concerned about its effects on the reputation of the charity.

§ Mr. Griffiths
I share the hon. Gentleman's concern. It would have been helpful if he had drawn attention to the other side of the story—that of Age Concern—as I have done.
The hon. Gentleman also referred to other important matters. There must be transparency in contract terms and trust arrangements. It is vital that the inclusive costs of any funeral and any additional costs are included in the prepayment plan or that any omission is made perfectly clear to those considering taking out the plan so that they can seek a more comprehensive plan or a cheaper plan that is not all-inclusive. Of course we want to ensure that information is available on the fees paid to plan providers. 303 It is also important that all the aspects that I have raised with the Advertising Standards Authority and the Charity Commission fall within existing, well worked and acceptable codes.

§ Mr. Chidgey
May I return to a previous point? We have looked at the Minister's proposals for regulation of the providers of pre-paid funeral plans and I am grateful for his answer on that. However, by purchasing a plan from a large organisation, one is inevitably locked into using one of its funeral directors. The issue is whether that limits competition and choice. Is it possible to separate investing in a pre-paid funeral plan from using a particular funeral provider? A national charity may be in a good position to consider whether a funeral director should have to subscribe to certain standards in order to be one of the recommended, preferred or accepted funeral directors able to access a pre-paid plan purchased from a separate or third party. I hope that the Minister can also address my problem in respect of the NHS bereavement services.

§ Mr. Griffiths
I will do so as soon as I have answered the hon. Gentleman's previous question. As part of the investigation by the Director General of Fair Trading into the Monopolies and Mergers Commission report and the subsequent dealings with one major provider that the hon. Gentleman may have in mind, the director general is responsible for monitoring any undertakings given and a review of the position is about to be undertaken by the director general's officials. There are concerns about transparency in respect of price and ownership. If such concerns persist in the industry, the Director General of Fair Trading will consider whether any other issues need further consideration or study.
The hon. Gentleman raised a valid point about the role of hospitals. A complaint has been lodged in respect of one hospital—the Central Middlesex Hospitals trust—because of its decision to provide mortuary and bereavement services. The Director General of Fair Trading has considered the arrangements under competition legislation, 304 but found no evidence of anti-competitive behaviour, either on the part of the hospital or by the successful contractor, which would justify the use of the director general's competition powers.
As always, however, if further evidence is presented by any aggrieved party, hon. Members or anyone else, the director general will examine the matter afresh. In that respect, and in respect of advertising and marketing reports, it is important to put into perspective what has been done and the action that has been taken by the Government and organisations such as the Office of Fair Trading and to examine all the ramifications and aspects of the issue.

§ Mr. Chidgey
I commend the Minister's openness in discussing the issue and, as the months go by, I hope to have the opportunity to consider the possibilities of regulation and legislation in more detail, and in a more consultative way, perhaps outside the House.

§ Mr. Griffiths
Certainly our examination of the issue will not lack detail. I should summarise for the House the steps that we have already taken and where we will go from here.
We have been in touch with the Advertising Standards Authority in writing about alleged abuse by one provider and possible breach of the authority's code. I hope to have the opportunity to report its findings in due course. Likewise, we have been in touch with the Charity Commission about concerns that have been expressed in the House and elsewhere about a commercial arrangement between charities and funeral providers which may not be fully transparent. Of course such an arrangement must be fully transparent, as I am sure that all hon. Members would agree.
We have taken an important step in contacting all the major associations of funeral providers to ensure that they spell out to their members their legal obligations, which may be wider than some hon. Members had thought. As I have said previously, the way ahead is—

§ Mr. Deputy Speaker (Mr. Michael Lord)
Order. We must move on to the next debate.