Savers on the Safe Hands funeral plan will get only one-fifth of the money back, maximum
Disappointment: Wartime worker Doreen Lewis’s funeral was paid for by her children
Administrators appointed to investigate the disappearance of funeral plan provider Safe Hands Plans have told customers not to expect more than a fifth of their money back.
This despite the fact that his money was intended to be safeguarded in a trust overseen by independent trustees.
This devastating and depressing news is contained in a document made available in recent days to 47,000 Safe Hands by FRP customers, and seen by The Mail on Sunday.
FRP was appointed as administrator of the business at the end of March. His financial work so far confirms the conclusions of the detailed investigation The Mail on Sunday has carried out on Safe Hands over the past two months. Namely, that the trust assets have been mismanaged, misused and misappropriated.
Safe Hands was purchased by Richard Philip Wells in February 2020 through private equity firm SHP Capital Holdings for £9m.
He immediately replaced the trust fund’s independent trustees with an outside firm (Sterling Trust Corporation) whose CEO was a former business partner.
A director of 19 companies and the former head of eight, including several that collapsed, Wells leads an affluent lifestyle, owning two large houses in the West Midlands, each worth around £1.2m.
Safe Hands clients, whose average age is 70, typically paid £3,000 for a funeral plan of their choice.
Such plans are intended to offer peace of mind by ensuring that all funeral arrangements are paid for and agreed upon in advance.
However, if the FRP sums turn out to be correct, customers will get no more than £600, probably less.
The collapse of Wakefield, West Yorkshire-based Safe Hands followed the withdrawal of its application to become a regulated provider of funeral plans when the Financial Conduct Authority begins monitoring the industry at the end of July.
Burial plan providers are currently being investigated by the watchdog to see if they are financially fit and suitable to continue in business.
Of the 75 companies on their radar, 32 have submitted applications to be licensed, while 20 have indicated that they do not intend to apply or have not yet applied for licensing. Thirteen providers have withdrawn applications, including Safe Hands. This indicates that the remaining dozen are struggling to meet the required FCA standards.
The regulator warns potential buyers not to buy a plan from a provider that has withdrawn its application.
Among the 12 are some high-profile brands, including Capital Life (based in Wilmslow, Cheshire) and Stockport-based Pride Planning. It is also not currently accepting new purchases.
At the end of last month, FRP raised concerns about £60m of Safe Hands’ trust assets being held in “high risk and illiquid investments”, many of them based in offshore jurisdictions.
He said its value would be ‘materially lower’. He also questioned whether any of the assets were actually owned by the trust. However, he has now quantified what ‘materially inferior’ means.
In its latest report, it says the realizable value of these assets “will be between £10.6m and £16.1m.”
These figures compare with ‘claims against the trust’ (the cost of promised funerals) of £71.13 million.
‘This is equivalent to a return [for planholders] between 10 pence and 20 pence a pound,’ he says.
FRP says it is working with the Pinsent Masons law firm to ‘identify and pursue’ the trust’s assets.
News of the fund’s woeful financial health has angered consumer pundits and clients.
James Daley, head of research firm Fairer Finance, has long called for the market in funeral plans to be regulated.
As he says (below), Daley believes the government should step in to ensure Safe Hands clients receive the funeral they paid for in good faith.
Mike Lewis attended the funeral of his mother Doreen, 95, six days ago at Cottingley Hall Crematorium in Leeds. The cost was supposed to have been paid for by a plan he purchased from Safe Hands.
Although Dignity Funeral Company offered to carry out the funeral as part of a temporary agreement reached with FRP, Mike and his two brothers opted to pay for a funeral organized by local directors Bennett of Morley.
“They arranged the funeral for our father, who died when he was only 62 years old,” says Mike. “They are compassionate, trustworthy and supportive of families in their darkest hour, and they made Mom proud.”
He adds, “We were able to reflect on her remarkable life: a member of the Women’s Auxiliary Air Force in World War II and someone who worked well into her 70s.”
Mike, an auditor, has taken a keen interest in Safe Hands since his move into management, examining the financial accounts of companies connected to 35-year-old Richard Philip Wells. He believes that if the trust assets are proven to have been misappropriated, criminal charges should be filed.
Tom Gormanly was named CEO of Safe Hands when Wells purchased the company. He only learned of the trust fund’s dire financial situation when the FCA raised concerns in February this year.
On Friday, he told The Mail on Sunday: “My hope now is that FRP finds out exactly what happened to the trust fund and reveals the truth.”
The government must intervene after its role in the failure
Lawsuit: James Daley
When I started my campaign to regulate the funeral planning industry in 2017, I knew if I was successful I would end up with thousands of customers losing their money.
It was clear from our investigations that firms like Safe Hands Plans were playing fast and loose with customers’ cash.
But this could and should have been avoided. In 1999, the Treasury published a consultation document announcing plans to protect customers from funeral plans.
In the rules that followed, he said companies could avoid outright regulation by the new financial regulator, but only on the condition that they comply with a clear set of rules on how to look after customers’ money.
This would have been fine if the Financial Services Authority, the forerunner of the Financial Conduct Authority, had done its part and kept an eye on whether companies complied with the rules. But he did not do it and neither did the Treasury.
As a result, the conditions were created for the likes of Safe Hands to get away with what we now know they have.
It was government and regulatory failure two decades ago that led to the mess we are in now. And it is the Government’s act of introducing the regulation today that will crystallize the losses for thousands of funeral plan holders. That is why I firmly believe that it is the responsibility of the Government to compensate those who are going to lose out.
With the support of the funeral planning industry, the bill doesn’t have to be huge. Also, the cost will not arise overnight: these plans will mature over a 20-year period.
John Glen, Economic Secretary of the Treasury, moved quickly to introduce the regulation when we told him about the problems in the industry five years ago. And of course he wasn’t in charge when the regulation failed 23 years ago. But he is now, and this is his time to step up and do the right thing for the thousands of customers they are destined to lose.
Repair their losses and let them have the funerals they paid for when their time comes.
James Daley Managing Director, Fairer Finance
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