If a funeral plan company goes bust or into administration, what happens to your plan depends on when the provider failed and whether the FCA regulated it. Where a regulated provider fails on or after 29 July 2022, the Financial Services Compensation Scheme (FSCS) aims to move plans to a replacement provider or to pay compensation, with a limit of £85,000 per eligible person, per firm. Failures before that date fell outside the scheme, which is why Safe Hands customers could not claim from it.

Arranging a funeral for someone whose plan is caught up in a failure? GOV.UK explains that a funeral can be paid for from the person's estate, such as their savings, or by family or friends. Someone on certain benefits may get a Funeral Expenses Payment, though it will not usually meet the full cost, and where the person who died held a pre-paid plan it gives no more than £120, for items the plan leaves out. People in Scotland apply for the Funeral Support Payment instead.

If a conversation would help, a broker can ring you after you submit your details in the enquiry form, to go over funeral plans and funeral cover. It costs nothing.

What happens to your plan when a provider goes into administration?

A provider that goes out of business should already have lined up a new regulated provider to take over its plans, or it may pay compensation, according to the FSCS's funeral plans page. Where those arrangements are not in place, the FSCS protects plan holders of authorised providers. Whether yours is covered turns first on this:

If you have a funeral plan and your provider has gone out of business on or after 29 July 2022, you may be FSCS protected. This includes funeral plans bought before this date.

The provider also has to be regulated by the FCA. Because the test is the date of the failure rather than the date you bought, a plan taken out years ago can still qualify. The limit and the basis for any payment:

For all types of funeral plan claims, you are protected up to £85,000 per eligible person, per firm.

If you choose to receive compensation, FSCS will calculate the amount by reference to what it would cost to buy the same plan on today’s market.

Replacement plan first, compensation as the alternative

The scheme works with the failed firm, the FCA and the insolvency practitioner to gather what it needs, and "in most circumstances you won’t need to make a claim". Where possible it offers a new contract with a replacement regulated provider: a like-for-like plan on the original terms, or terms as close to them as it can get. You are asked before that is completed; if you would rather not take the replacement, you can have compensation, and compensation on the same basis is paid if no replacement can be arranged. Each claim is different, so no fixed timescale is given.

Claims of another kind, about advice to take out a plan or the way it was set up, follow a separate route. Here the activity itself has to date from 29 July 2022 or later, and you check online whether you can claim.

What happens to the money held in trust or insurance?

The FCA's rules for providers (FPCOB 3.1, in force since 29 July 2022) aim for plans "underpinned by robust trust or insurance arrangements". Each plan is backed either by a life insurance contract from an authorised insurer, sufficient to provide the agreed funeral, or by enough of the customer's payments to provide it, placed in a trust. How each route is set up, from trustees to audits, is on our page on how the FCA regulates funeral plans. On a failure, the two routes behave differently:

  • Insurance-backed plans. The policy must not end because the provider has failed, and the insurer has to co-operate with the FCA, the FSCS and any insolvency practitioner. Money can then go to the customer, to next of kin after the covered person's death, or wherever an FSCS determination directs.
  • Trust-backed plans. The trust's assets are kept apart from the provider's own. Unless arrangements to keep plans going are already in place, the trustees pay each customer their reasonable estimate of what a replacement plan on matching terms would cost at the time of failure. If the trust cannot cover everyone in full, each receives a proportional share instead.

So the rules accept that a trust can fall short; for an authorised provider that fails without arrangements in place, the FSCS protection described above can apply. The rules also require plan money to be safeguarded so that it never becomes the provider's own asset, including on failure. Which route a plan uses is in its documents; our comparison of funeral plans sets out how the main providers describe theirs.

Unsure from your paperwork whether a plan sits on a trust or a policy? Fill in the short form beside this guide and a broker who holds FCA authorisation rings back to explain how the plans you are weighing are backed, at no cost.

Does this protect a plan bought before 29 July 2022?

For a failure after that date, yes: FSCS protection "includes funeral plans bought before this date". Old contracts were not rewritten overnight, though. In FPCOB 3.1.2G the FCA only "encourages" firms carrying out older plans, along with their trustees and insurers, to work together to bring those arrangements into line with the current rules, so an older plan may still rest on a trust or policy set up on earlier terms.

A failure before 29 July 2022 is a different matter, as Safe Hands shows below. To confirm a provider's status today, see how to check a funeral plan provider on the FCA register.

Which funeral plan providers have gone bust?

The provider at the centre of FCA statements in 2022 and 2025 is Safe Hands Plans Limited, a trust-based firm that went into administration. To check any other name, the FSCS keeps a searchable list of failed firms: enter the company name or its FCA firm reference number, and a failed firm has its own page on what to do next.

What happened with Safe Hands

Safe Hands had more than 46,000 plan holders, who paid by lump sum or by instalments over up to 25 years, according to FCA background quoted in the Complaints Commissioner's report of 21 February 2025. The terms said plan money was to be ring-fenced in a trust. Safe Hands applied to the FCA for authorisation and withdrew on 9 February 2022; the FCA's notice of 15 February 2022 said it would not take new customers, and the firm shortly afterwards went into administration.

The same FCA background says the administrators assessed that the trust investments were not enough to meet the funeral plan obligations, and that customers should not expect more than 20% of their money back through the administration. It adds that Safe Hands customers did not qualify for FSCS compensation because the sector was not FCA-regulated until 29 July 2022. Administration figures can change over time. The FCA says it worked with Dignity and Co-op so that customers could find new plans at a discount (our Dignity page covers that provider).

For a complaint about events before 29 July 2022, the Financial Ombudsman Service can look at it only if conditions are met, one being that your provider was a member of the Funeral Planning Authority at the time.

What if the plan holder dies while the provider is failing?

The FSCS addresses this directly. If a plan holder dies after their provider fails, but before the FSCS has secured a new plan or paid compensation, and the insolvency practitioner cannot secure a funeral, "then FSCS may be able to help with the provision of a funeral". A next of kin or nominated representative should contact the funeral director named in the original plan, who will advise on next steps, and then let the FSCS know.

Other ways a funeral can be funded are in our guide to whether life insurance covers funeral costs.

What can you check on your own plan?

Start with the name of the provider, which the FCA says you can find in your paperwork or by contacting the firm that sold you the plan. A provider missing from the FCA register should contact its plan holders, the FSCS says; if you have heard nothing from it or its administrator, get in touch with them as soon as possible.

If you only want out, cancelling is a separate route: see cancelling a prepaid funeral plan. Moving a plan is covered on transferring a funeral plan, and the pros and cons against a policy on funeral plan versus life insurance. The steps to buying one are on how to get a funeral plan; the funeral plans guide covers the rest of the subject.

Frequently asked questions

What happens if my funeral plan provider goes bust?

When a provider the FCA regulates goes out of business on or after 29 July 2022, a replacement regulated provider should take the plan on, or you can be compensated up to £85,000 per eligible person, per firm. In most cases you will not need to make a claim.

Which prepaid funeral plans have gone bust?

Safe Hands Plans went into administration shortly after withdrawing its application for FCA authorisation in February 2022. For any other provider, search the FSCS list of failed firms.

Can I get my money back from a failed funeral plan provider?

It depends on the failure date and the provider. For failures from 29 July 2022 by regulated providers, the FSCS can arrange a replacement plan or compensation. For Safe Hands, the FCA quotes the administrators as saying customers should not expect more than 20% back.

How long does the FSCS take with a failed funeral plan?

It does not give a set time, because each claim is unique and can be complex. It says it is aware of the time sensitivities in funeral plan claims and will work as quickly as possible to resolve them.

Plan paperwork can be hard going alone. If a second pair of eyes would help, filling in the form on the page brings a broker's phone call, free, to talk over funeral plans or funeral cover; it takes a few minutes.

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