Funeral industry faces new competition probe when coronavirus pandemic eases

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Britain’s funeral industry has avoided having price controls imposed by the competition regulator but faces a new investigation when the coronavirus ((COVID-19) pandemic eases.


In its final decision following a recent investigation, the Competition and Markets Authority (CMA) confirmed its provisional conclusion that a ‘Sunlight’ regime should be introduced rather than controls, which will involve much more transparency about funeral costs in future.


Under the recommendations, funeral providers will have to publish prices to allow comparisons of costs and also any key terms such as if a deposit is required.


Commission relationships between funeral directors and hospitals, hospices and care homes will also have to be disclosed.


The CMA also wants an independent inspection and registration service to be set up, which it said would be the first step towards a wider regulatory framework for the industry.


In a warning, the CMA also added that if it had not been for the pressure on the industry caused by coronavirus the measures would have been a lot tougher.


That would have included price controls, it added, with one of the recommendations that when conditions stabilise a new investigation is considered as the CMA ‘continues to have serious concerns about the sector’.


In a statement, Martin Coleman, CMA Panel Inquiry Chair, said: “The CMA will be keeping a close eye on this sector to make sure our remedies are properly implemented and help it to decide whether further action is necessary when circumstances return to a more steady state.”


The Co-op and Dignity PLC (LON:DGNY) account for 30% of branches and are often significantly more expensive according to broker Peel Hunt.


“We estimate by approximately GBP800 and GBP1,400 respectively than many of the small typically family-owned businesses that operate the majority of branches in the UK,” the broker’s analysts said in a note to clients.


“It is clear the CMA would have proposed price regulation without the intervention of COVID-19,” it added.


The regulator believes that prices for funerals are over GBP400 too high and in cremations over GBP210, resulting in a total loss to consumers of over GBP300mln and this issue is not going away, said the broker.


Shares in Dignity fell 6% to 640p.




— adds broker comment, share price —

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