The competition regulator has launched an investigation into the £2bn a year funerals market to see if people are being charged too much when they lay their loved ones to rest.
The Competition and Markets Authority is to look at issues including the rate at which funeral directors have raised prices in recent years.
It will also look at whether the information provided by funeral directors on prices and services is too confusing for people to be able to choose the best option for them.
“Profit margins in the ‘at-need’ funeral market have been inflated for years,” says James Daley, managing director at consumer group Fairer Finance.
“Customers who buy funerals are grieving and have no idea what a fair price for a funeral is. And sadly they have proved far too easy to take advantage of. This market needs tighter regulation and better protections for consumers.
“Everyone will need a funeral eventually, and it’s important that we can be confident we are paying a fair price for a good quality service.”
The average cost of a funeral is estimated to be nearly £3,800, not including discretionary extra costs that can add £2,000 to a bill. This is more than double the price when insurer SunLife first started tracking prices in 2004 in its Cost of Dying annual report.
The rising level of cremation fees will also be a key focus of the CMA’s investigation, as cremations now account for about 75% of all funerals.
Separately, the Treasury has announced that it is launching an investigation into the pre-paid funeral sector – around 1.3 million people in the UK have a pre-paid plan – responding to bad practice in the industry.
“People can understandably be very emotionally vulnerable when planning a funeral,” said Daniel Gordon, senior director of markets at the CMA. “We therefore think it is important that, at what can be a particularly challenging time, the process is made as easy as possible.”
News of the two investigations sent shares in Dignity, one of the UK’s biggest funeral providers, tumbling almost 11%.
In January, Dignity said it would consider disclosing its prices online and introducing a single national tariff for basic services amid mounting competition and criticism of its business model.
The FTSE 250 company, which in January issued a profits warning, has seen its share price fall by over 50% in the last year.
The company was forced to cut the price of its cheapest funeral package by 25%, after larger rival Co-op started cutting its prices in 2016.
In January, Dignity said that initial reported deaths for 2017 were 590,000 in Britain, and the group conducted 68,800 funerals, compared with 70,700 the previous year. It noted that the Office for National Statistics predicted approximately 580,000 deaths in 2018.
Last year, Dignity sponsored a report from Fairer Finance that uncovered an array of problems in the pre-paid funeral sector, both in terms of conduct and consumer protection. The Commons work and pensions committee also passed evidence from a report last year into funeral benefits to the CMA.