Funeral Plans and Energy Credit

BBC Sounds. Music, radio, podcasts. Hello. Welcome to this Moneybox podcast. We have more on refunds from your energy firm when you've built up a credit. And that's after a huge response from our listeners. Nearly half a million new 18-year-olds have not claimed hundreds, even thousands of pounds, waiting for them in child trust funds which the government and parents set aside for them. And is there a way to tell if you really are investing ethically? A new database may be a step towards that.

But first, a funeral plan firm with more than 13,000 customers has gone bust, leaving thousands of people without the plan they paid for. One Life Funeral Planning Limited was just one of around 40 firms which were not approved by the Financial Conduct Authority last July when it took over regulation of funeral planners.

It found significant issues with the running of One Life, including concerns over its poor sales practices. Attempts to find a regulated firm to take over its customers failed, and last November its directors put it into administration. The administrators have returned direct debit payments to customers which were made since November and provided funerals for customers who died up to the end of June. But now...

The business is being wound up and thousands of customers have no plan and have lost all the money they paid. Siju Wadi is in her 50s with a grown-up son living in America. She paid £3,650 for a one-life funeral plan in instalments over 12 months. i was so happy i have peace of mind i've done it i called my son i called my family you don't have to worry i am saved

And then this happened to me. It hit me very hard. I was unable to sleep for a couple of days, wondering what of if anything happens now. All my plans, my dreams have been shattered. I was crying. Because I'm like, what if something happens, I sleep and I don't wake up? I finished paying in October 4th and 2nd of November 2022, they went on administration. I said, how is this possible?

We also spoke to Chris and her husband, Brian. They each bought a plan from One Life costing £6,800 between them. We had a few phone calls from them before we actually... bought the policy and then we had somebody come to see us. Everything to start off with was safe. We thought everything was going to be okay for our children. They wouldn't have to find any money to help.

It's hit us hard. It has hit us hard. I mean, I'm 68, my husband's 76, so hopefully we've got a little bit more time, but it is stress and I don't really need it.

Well, listening to that is James Daly. He's managing director of the consumer group Fair of Finance, who's been following the fate of One Life and its customers. James Daly, these are significant sums of money for people like Sidiwadi, Chris and Brian. How many more have lost? Well, we know there was 13,700 customers at the time the company went bust. Some of those will have managed to get a bit of their money back.

but the vast majority of them are, as you say, going to lose every single penny. People may have heard of the story of SafeHands, an even bigger firm that went bust. Those customers are at least going to get about 15p in the pound back, but one-life customers are going to get nothing. Right, because the administration...

has told us that One Life had very limited assets when it was appointed, and it's aware, it says, of planholders' questions about One Life's business model and practices, which it's looking into. Does that mean there really is no money left to pay people anything? Yeah, nothing at all. What there was left ended up being spent on administrative fees. Administrators always get paid. And those final funerals. So now there is nothing at all.

And on the timing of this, James, the FCA refused to regulate it in July 2022. It couldn't offer funeral plans after that, but it continued to take money until the directors put it in administration. in November, and Sidiwadi paid her last instalment just weeks before that. Was that allowed? Well, the Treasury had extended the amount of time that firms had, if they were rejected regulation, to stay in business.

so that they could try and sell themselves. But what's bizarre here is, you know, their application had been rejected. Presumably the FCA had had the opportunity to have a good look at... what money there was and what the chances of the business being sold were. And surely they could have seen that there was very little money in the trust and nobody was going to buy them. So quite why they were allowed to continue taking money even after their application was rejected.

is mystifying. And why couldn't the FCA have acted much sooner than July even to reject their application they'd applied in October the previous year? It did tell us it acted as soon as they were able and took action to prevent new customers buying funeral plans. But that, as you said, didn't stop payments being made from those already in a plan like Sigurdwadi. Exactly. And I think actually the vast majority of the money that was lost was paid in in that final year.

while the application was sitting on the desk of the FCA. So if they had looked at it sooner, they could have started putting the warnings out there that this was a company that wasn't going to make it and people could have taken action. Yes, I think they said they did put out some warnings, but the Treasury told us...

because, of course, it authorised this extension to the end of October, didn't it? It has no investigatory or enforcement powers, would not have been in a position to investigate any concerns. So here's the FCA, the regulator. the Treasury that made the rules, neither of them taking responsibility. And they can't get compensation, these people, because it wasn't regulated at the time. Do you think the FCA and Treasury should get together and offer them at least something?

I absolutely do. The Treasury, when they created the Financial Services and Markets Act in 2000, put out a bold press release saying that they were legislating to protect funeral plan customers. So either they botched writing those regulations or... They didn't put the framework in for the FCA to uphold them. Or the FCA was negligent in upholding them within the framework it had.

And James, just briefly, I know some people who paid by credit card can get money back through what we've talked about before, Section 75, or charge back with a debit card. But Chris and Brian told us they spoke to their bank about charge back. That's when the administration... happened. They were told to wait. Now the bank says it's too late. Are people in that position?

There are a lot of people who have had chargeback claims rejected. We would urge them to appeal to the Financial Ombudsman Service because actually the chargeback rules do say that the 120-day time limit should not apply for goods and services that are to be provided in the future.

and haven't yet been delivered so we don't think it applies in this case and people should appeal it we'll see what happens james daly affair of finance thank you very much now on wednesday felicity hannah's here with moneybox live that's all about the cost of funerals and how to reduce it. Have you decided on the send-off you'd like? How it will be paid for? And indeed, who by? Email questions and comments. Moneybox at bbc.co.uk. Leave a phone number if you can. She'd love to hear from you.

A former senior director of the energy regulator Ofgem has told Moneybox the amount of credit held by energy companies is a real problem that needs looking at. It comes after we revealed last week that suppliers held more than eight billion of customer money.

in credits on their accounts just in the first three months of this year. Now, we'll hear from that former director, Christine Farnish, in a minute. But first, our reporter, Dan Whitworth, has been following some of the literally hundreds of messages you sent on this subject, Dan.

Well as you say Paul, we've been... inundated with listeners getting in touch wanting to tell us their stories when it comes to credit on energy bills now some of them were positive talking about how quickly they'd been refunded how they'd been given great customer service and how in some cases they'd even been paid interest on that credit but the vast majority weren't so positive about energy suppliers and you revealed

8.1 billion pounds of our money was held as credit, most of that from households. That's a very big number, Dan, but it's not all bad, is it? No, and it's really important to say again. Credit, especially at this time of year, it can be a good thing, a useful way of budgeting.

The idea is you pay more in the summer when your actual bills are smaller and you build up that credit. You then spend that credit in the winter when your bills are bigger but you stay paying the same monthly amount. But, and it's a big but, Too much or excessive credit means customers lose out on having access to their own cash, and an even bigger problem is when customers ask for some of that money back and don't get it quickly enough. John from Nottinghamshire got in touch.

Just over a month ago, I asked for £500 of my £1,400 credit back. Unfortunately, after numerous emails, I haven't even had an acknowledgement, let alone any response to whether they agreed to let me have my own money back. It wasn't until I heard Moneybox last Saturday that I realised that this is not a problem.

peculiar to me it's a much bigger problem and the 8.1 billion pounds that these energy companies have got stashed away of our money is absolutely obscene and i think it's about time that these people were challenged and a better system was introduced whereby

customers can have more control over their cash. Customers having more control over their cash, Dan. Is that likely to happen? Not as things stand. You'll remember we heard from Angus McNeill, MP, on this. He chairs Parliament's Energy Select Committee.

and talked about exploring things like limits on the amount of credit suppliers can hold or even paying interest on that credit. Now, we asked the regulator Ofgem and Energy UK, which speaks to suppliers, for an interview this week. Both of them said no in a statement. Offgem said protecting customers is its top.

priority and that it encourages suppliers to help customers spread the cost of winter over a full year to help them manage their bills. Energy UK told us at the time this £8.1 billion was being held, prices were extremely volatile and the level of government help was unknown.

Thanks, Dan. Well, I'm joined now by Christine Farnish. She resigned as a non-executive director at Ofgem just over a year ago. She's now chair of the Money Advice Trust, which runs National Debt Line. Christine Farnish, about time a better system was introduced, John told us. What do you make of John's experience? Just one of many of this £8.1 billion held.

I think it's really concerning. And it does worry me that, well, there are three things that worry me really, Paul. The first one is just that the Paul... level of customer service in terms of responding to the phone and emails that still pervasive across the the energy retail sector i mean i don't think suppliers have put enough resource into their frontline staff and their customer service desks and that really does need to be put right especially as we come into winter

There are going to be all sorts of problems that customers have out there that need sorting. The second issue is why is there all this excess money sitting there in January, which is halfway through winter? I don't buy the argument that the firms said that prices were volatile because, of course, they knew exactly what the price was going to be they charged customers because that's determined in advance through the price cap.

So I suspect what's been going on is either they've miscalculated and they're over-egging the direct debits, or secondly, which could be even worse, they're putting their hands in the pot. to fund their own business operations and I think under the current rules they're allowed to do that. What should ideally happen is that consumer credit balances should net out at zero once a year.

before they're set again so there shouldn't be an overall surplus or an overall deficit I mean they're never going to get it perfect but that's That should be the intention. I think there needs to be a lot more transparency about how much is being held. Yes, I can't stress enough the anger and the quantity of angry emails we've had. Mary was £600 in credit. Rob, £1,200. for months. Derek said...

cowboy energy companies. Lorraine said it's a disgrace. And John, perhaps more practically, said the system is cumbersome and a waste of everyone's time. Should there be an easier system than, you know, talking to chatbots or spending hours on the phone? Well, in an ideal world, you'd want some sort of fast track system, wouldn't you, for this? I mean, we mustn't forget this is customers' money.

They've let the firm have it on good faith, assuming that's what they needed to hand over to pay for their energy. But actually, if the firm's collecting more than they need... or having an awful lot of it up front when it's not needed, then that's wrong. And if someone wants their money back, they should be able to get it very quickly and easily.

Yes, and of course, Ofgem told us that customers have the right to ask for it back and be refunded in what it calls a timely fashion. If not, go to the ombudsman. Is that good enough? What does a timely fashion mean? Well, you've hit the nail on the head. The problem is, who defines what timely means? I would say just looking across retail services.

in other sectors of the market outside energy i mean 30 days would be a long time wouldn't it to get your own money back you'd expect it that promptly i think i think of gem should set a hard target here 30 days perhaps, which would be quite generous, I think, to the industry. And there should be fines imposed or compensation payable if it takes longer than that for people to get their own money back.

And you say, obviously, you say it's our money and does the firm use it for its own purposes? Should it be sort of ring fenced and protected? This is a long running argument. I think it would be a helpful move if it was because it would reduce these. or get rid of these perverse incentives that are there in the system otherwise. I mean, if it's very easy for this pipeline of money to come rolling into energy companies' coffers and...

Consumers don't really know whether they've overpaid, underpaid, just where they are on their payments because, you know, it's very hard to tally that without knowing unit prices and doing a whole load of work. the company can actually use that money for their own purposes. So they're incentivized to actually overreg the direct debits. And that's not a good way to protect consumers, is it?

Christine Farnish, thanks very much. And some listeners did tell us that they avoided these problems by paying their bill each month in full. No credit builds up and you can have the same tariff. You can read more on that story on BBC News Online.

Hundreds of thousands of 18 to 21 year olds have yet to claim their child trust funds worth around a billion pounds in total. The funds were set up by the government nearly 20 years ago and mature as those babies now become 18. Dan's still here and has more. on this too Dan? Well every baby born from 1st of September 2002

to 2nd of January 2011, had a child trust fund set up for them, seeded with at least £250 of public money. Now they're entitled to take the money out or reinvest it as from their 18th birthday. So everyone... who becomes 18 from September 2020 if they haven't got it already currently has cash waiting for them. So why are there so many of these new adults who don't claim the money?

Well, some are just completely unaware they have it, Paul. Every parent of a new baby was sent vouchers to open a fund. But if they didn't do it, well, within 12 months, the Treasury opened one for the child. Other parents who did open the fund, well, they may have forgotten about it. or don't know how to find it. HMRC says these funds are worth an average of £2,000 each, so very much worth checking. And how can people born from September 2002 find where their account might be?

Okay, so child trust funds can be tracked down free, and this is the website address you need. It's findctf... .sharefound.org. They can also be accessed via gov.uk. You have to search child trust fund, but that way does need a government gateway account.

Thanks, Dan. So if you've got a child or grandchild or nephew or niece who reached 18 in September 2020 or later, or with an 18th birthday coming up, check they know about their child trust fund money. If they don't, you'll be very popular. The website again.

findctf.sharefound.org. Now, if you want to invest, how can you be sure that the firms you're investing in fit in with your beliefs? This week, a new financial exclusions tracker website went live. It lists companies that have been boycotted by investment firms or banks for green or ethical reasons. Ward Wormadam, a senior researcher at Profundo, as one of the organisations... behind the financial exclusions tracker.

We collected the exclusion list of 90 financial institutions, publicly available ones, and standardized their motivations for excluding certain companies from their investment universe. Firstly, they're in different languages, Swedish, Danish, Dutch.

So we had to standardize that, we had to translate that and then standardize sort of these variations in motivation so that we can have categories. So you have a main category, climate, human rights, environment, weapons, tobacco, and then within those main... categories, you have subcategories and sub subcategories that allows analysts, researchers, media and civil society organizations to then see which companies are excluded for which motivations in a more standardized approach.

it's it's almost like you're encouraging the the companies to improve their practices by being on this list and you do see the companies do improve their practices and are removed from those lists Ward Warmadam on his new tracker. But that might be just the start of your investigations. Many companies have what are called ESG funds. That stands for environmental, social and governance. But how do they fit in with green or ethical? And there are concerns.

that industry definitions of ESG, or what's called sustainability, may leave our money invested in firms that still damage the environment. Well, here to help us is Dr Nina Seeger, Director of the Centre for Sustainable Finance at Cambridge University.

Dr. Seeger, this tracker allows you to search for companies operating in the UK and see who has excluded them. Is this the first time something like this has been done? Hi, Paul. Well, I'm aware of something called the fossil... which is a US website where you can put in your fund and see whether it's invested. within particular fossil funds. However, in the UK, I do think, or globally rather, it's probably one of the first trackers that looks at

combining all of the different exclusions that investment firms and other financial institutions. And could a tracker like this put pressure on companies to change their practice, as Ward suggested it did? Of course. Ideally, what you'd also like to see is a situation where financial firms engage with those companies and put forward a transition plan where they're...

become less environmentally and of course at the very end engagement process that they exclude them. So it acts as teeth at the end of engagement I think. Now, environmental, social and governance, that's ESG funds, are available. But the consumer group, which found last year that many which describe themselves as sustainable, are investing in firms linked to forest fuel and deforestation. So how can you be sure of that?

Well, it's really interesting because in the UK we have something which is... The green claims code, which is a voluntary code, which compared to the EU version of the EU green claims directive, which is mandatory. So we are looking forward to. Social Conduct Authority publishing mandatory rules that will mandate the environmental, social and government.

funds to be complying to certain standards. Yeah, there's also greenwashing, as it's called, isn't there? Companies doing one good thing for the environment and hoping no one will notice the bad things they do. How can a customer spot when a company isn't being transparent on this?

Well, that's exactly where we need a lot more regulation. We need stringent rules that will uphold the integrity of financial markets and that will protect customers from investing in funds that only claim to be sustainable. And you've got a report out next week linking protecting nature to climate discussions. But some of the funding for it comes from five UK banks, and two of them have been found by regulators to be guilty of greenwashing.

Five, all five are on this financial exclusions tracker. How careful are you about your sponsors? So the Centre for Sustainable Finance, which I lead, worked with over... 50 large financial institutions effectively the financial sector has a critical role to play to decarbonize the economy and we also need to green the financial sector so effectively make it more sustainable and it is for that reason that we work

together with financial institutions to provide them with research and with tools to drive ambition and action in this space. And hope for change. Briefly, Nina Seeger, how can investors strike a balance between sustainability and making the best returns? I mean, some advisors say, put your money in tobacco and weapons, they produce good returns.

Well, first of all, there is no differential between sustainability and performance. And we have thousands of academic studies that prove that. But second of all, subprime mortgages way back in the financial crisis, they were really, really profitable. But the problem is.

asset stranding. So you might invest in these things and then find out that you're not able to actually get rid of these investments. Dr. Nina Seeger, thanks very much. And that tracker I mentioned can be found at financialexclusionstracker.org. And those emails on credit with your energy company are still pouring into the inbox. Brian said his 94-year-old mother... £2,300 in credit. It's utterly outrageous, he wrote. Just one of hundreds that are still popping into the inbox.

Now, just before we go, on October the 6th, National Savings pulled its one-year bond, which paid 6.2%. If you didn't quite manage to get round to putting some savings in it, don't despair, you can still get over 6% on one-year bonds. bonds with two banks, though without that limitless guarantee which NS&I gives. In banks, the first £85,000 is safe and will be refunded within a couple of weeks by the Financial Services Compensation. scheme if the bank gets into trouble. And of course,

As you'd expect me to say, the best investment you can make is to spend time each week listening to the Moneybox podcast. If you enjoyed it, tell your friends and all subscribe on BBC Sounds so you never miss an episode. And you get Moneybox Live with... Felicity Hanna thrown in free. And remember to tell us all your booms and busts. Moneybox at bbc.co.uk. We do read them all and you might get your story on the podcast.

In this podcast, the reporter was Dan Whitworth, researchers Sandra Hardiel and Joe Krasner, studio manager Tom Clark. Our editor is Jess Quayle. I'm Paul Lewis, and this was a BBC News money and work production for BBC Sounds. And now that famous double act, Amol and Nick. Hello, it's Amol and I'm Nick and we're launching the Today podcast from Radio 4.

Come on then. What is it, Nick? Well, every week we're going to take a big subject we want to spend more time on because I don't know about you, when I present the Today programme, I'm always thinking of things I wish I'd asked, I wish I'd heard. And this is going to give us the time to do that, to get more...

more analysis, more insight, sometimes more gossip. Same goes for me. I'm looking forward to this. Episodes will drop every Thursday. It's called the Today Podcast and you can listen now on BBC Sounds.