Let down: Wartime worker Doreen Lewis’s funeral was paid for by her children
Administrators appointed to investigate the demise of funeral plan provider Safe Hands Plans have told customers to expect no more than a fifth of their money back.
This is despite the fact their money was meant to be safeguarded in a trust overseen by independent trustees.
This devastating and depressing news is contained in a document made available in the past couple of days to 47,000 customers of Safe Hands by FRP – and seen by The Mail on Sunday.
FRP was appointed as administrator to the business in late March. Its financial work so far confirms the conclusions of the detailed investigation that The Mail on Sunday has conducted into Safe Hands over the past two months. Namely, that trust assets have been mismanaged, misused and misappropriated.
Safe Hands was bought by Richard Philip Wells in February 2020 through private equity firm SHP Capital Holdings for £9million.
He immediately replaced the independent trustees of the trust fund with an outside firm (Sterling Trust Corporation) whose chief executive was a former business partner.
A director of 19 companies and a former boss of eight, including several that have collapsed, Wells has an affluent lifestyle, owning two large houses in the West Midlands, each worth about £1.2million.
Safe Hands’ customers, whose average age is 70, typically paid £3,000 for a funeral plan of their choosing.
Such plans are meant to offer peace of mind, ensuring all funeral arrangements are paid for and agreed in advance.
However, if FRP’s sums prove to be right, customers will get back no more than £600, probably less.
The collapse of Safe Hands, based in Wakefield, West Yorkshire, followed the withdrawal of its application to become a regulated provider of funeral plans when the Financial Conduct Authority starts overseeing the industry at the end of July.
The watchdog is currently vetting funeral plan providers to see whether they are financially fit and proper to continue in business.
Of 75 companies on its radar, 32 have submitted applications to be authorised, while 20 have indicated they either do not intend to apply or have yet to seek authorisation. Thirteen providers have withdrawn applications, including Safe Hands. This indicates the remaining dozen are struggling to meet the required FCA standards.
The regulator is warning potential buyers not to purchase a plan from a provider that has withdrawn its application.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. Neither is currently accepting new purchases.
Late last month, FRP raised concerns over some £60million of Safe Hands’ trust assets that were held in ‘illiquid, high-risk investments’, many based in offshore jurisdictions.
It said their value would be ‘materially lower’. It also questioned whether some of the assets were actually owned by the trust. However, now it has quantified what it means by ‘materially lower’.
In its latest report, it says the realisable value of these assets ‘will be between £10.6million and £16.1million’.
These figures compare to ‘claims against the trust’ (the cost of funerals promised) of £71.13million.
‘This equates to a return [for planholders] of between 10 pence and 20 pence in the pound,’ it says.
FRP says it is working with law firm Pinsent Masons to ‘identify and pursue’ trust assets.
News of the fund’s parlous financial health has angered consumer experts and customers.
James Daley, boss of research company Fairer Finance, has long called for the funeral plans market to be regulated.
As he says (below) Daley believes the Government should step in to ensure Safe Hands’ customers are given the funeral they paid for in good faith.
Mike Lewis attended the funeral of his 95-year-old mother Doreen six days ago at Cottingley Hall Crematorium in Leeds. The cost was meant to have been paid for by a plan she bought from Safe Hands.
Although funeral company Dignity offered to carry out the funeral as part of a temporary agreement struck with FRP, Mike and his two siblings chose instead to pay for a funeral arranged by local directors Bennett of Morley.
‘They took care of the funeral for our dad, who died when he was just 62,’ says Mike. ‘They’re compassionate, reliable and support families in their darkest hour – and they did Mum proud.’
He adds: ‘We were able to reflect on her remarkable life – a member of the Women’s Auxiliary Air Force in the Second World War and someone who worked well into her 70s.’
Mike, an auditor, has taken a keen interest in Safe Hands since its plunge into administration, scouring the financial accounts of companies connected to 35-year-old Richard Philip Wells. He believes that if it is proven that trust assets were misappropriated, criminal charges should follow.
Tom Gormanly was appointed chief executive of Safe Hands when Wells bought the business. He was only made aware 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 has happened to the trust fund and reveals the truth.’
Government must step in after its role in the failure
Demand: James Daley
When I started my campaign for regulation of the funeral plan industry in 2017, I knew that if I was successful it would end with thousands of customers losing their money.
It was clear from our investigations that firms such as Safe Hands Plans were playing fast and loose with clients’ cash.
But this could, and should, have been prevented. In 1999, the Treasury published a consultation paper announcing plans to protect funeral plan customers.
In the rules that followed, it said firms could avoid full regulation by the new financial regulator – but only on condition that they abided by a clear set of rules on how they looked after customers’ money.
This would have been fine if the Financial Services Authority – the precursor to the Financial Conduct Authority – had done its part and policed whether firms were abiding by the rules. But it didn’t and nor 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 the Government and regulator’s failings two decades ago which led to the mess we’re in now. And it is the Government’s act of introducing regulation today which will crystallise losses for thousands of funeral planholders. That’s why I firmly believe it is the Government’s responsibility to compensate those who are set to lose out.
With the support of the funeral plan industry, the bill doesn’t need to be huge. Furthermore, what cost there is won’t arise overnight – these plans will mature over a 20- year period.
John Glen, Economic Secretary to the Treasury, acted quickly to introduce regulation when we made him aware of problems in the industry five years ago. And, of course, he wasn’t in charge when regulation failed 23 years ago. But he is now, and this is his moment to step forward and do the right thing for the thousands of customers who are set to lose out.
Make good their losses and enable them to have the funerals they paid for when their time comes.
James Daley Managing Director, Fairer Finance