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THIS MONTH’S STAR LETTER ★

We are regularly told funeral costs are spiralling. Your recent piece by Ruth Jackson suggests that the cost of dying is more than £7,000 and many other news stories suggest you’ll need £10,000 to pay for a funeral. But it is not always as high as we are being led to believe.

My mother sadly passed away in January and so we have been through the whole process. We engaged the services of a funeral director, arranged a church service and a cremation and organised a wake. We booked the hearse and two cars and held the wake at a local hotel for 80 people. Notices were put in a local paper and we also paid for a beautiful floral tribute.

Luckily, we were spared the costs of a solicitor or bank to wind up the estate, so the total cost was just under £3,000 and the wake a further £750.

Clearly, this is a not insignificant sum of money but it is certainly half of what I had been expecting in the light of recent press coverage.

FUNERAL COSTS

I believe the costs are being inflated in the press as a sales tool for the funeral industry and are fueling the concerns of the elderly about being a financial burden when they have gone. I urge all your readers to ensure they and their loved ones are not lured into expensive and unnecessary insurance policies by this over-inflated hype. JP URQUHART/VIA EMAIL

scam

Rest in povertyWhydeathis the last rip-off

Nobody wants to think about dying, which means those in the funeral game are able to thoroughly fleece us. It’s time to wake up to the need to plan for our final farewell

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MWS_0212_022-24_FUNERALS.indd 22-23

Moneywise’s Ruth Jackson replies: It’s great to hear the personal experience of a reader, and good to know it is still possible to send off a loved one for less than £7,000. I have no doubt that some companies will exaggerate the cost of funerals in

£50

FBY RUTH JACKSON BY

EW THINGS IN LIFE are predictable. You cannot foresee how many homes you’ll buy or how many children you’ll have. However, one thing is for sure: we’ll all die. So this should be one element of our lives we can completely plan for, but we don’t. The reality is most of us don’t even discuss what we’d like for our funeral, let alone how to pay for it.

Dying is an expensive business. While an extravagant funeral like Pat Butcher’s recent send

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Left: Pat Butcher’s extravagant funeral in the BBC’s EastEnders is probably unaffordable for most people

THE COST OF DYING The average cost of dying is £7,247, made up by: £3,091 – Non-discretionary funeral costs including funeral director fees; doctors’ fees; fees for a religious or secular service; and burial or cremation charges. £1,864 – Discretionary funeral costs including death and funeral notices; flowers; order sheets; funeral cars; catering for the wake; venue hire; and a memorial. £2,292 – Estate administration fees including the cost of professional services such as solicitors and banks to wind up the deceased’s estate. Source: Sun Life, 2011

Funeral directors have put their prices up by 6.7% in the past year to underpin profits the service; and burial or cremation fees. The cost of the death certificate has stayed the same but all the other elements have risen. The Church of England has increased its funeral fees as cashstrapped parishes attempt to augment their income. Funeral directors have also put their prices up by 6.7% on average over the past year as a means of underpinning profits as the death rate continues to fall (it has been declining since the 1970s), while their costs are rising.

But the biggest factor is the soaring cost of cremations or burials. Cremation fees have risen by 117% since 2001, according to a study by the Yorkshire Post – in 2011 Sun Life Direct put the average cost of a cremation at £705.

off on EastEnders would set you back £15,000, an average one will cost you £4,955, according to Sun Life’s Annual Cost of Dying Report 2011 – making it the fourth-biggest expense we all face after buying a house, getting married and having children. We need to wake up to the costs because, at present, businesses are several steps ahead of us and are making big bucks from our ignorance. The basic cost of a funeral has risen by 61% over the past eight years – vastly outpacing inflation, which has risen by 24.4% over the same period.

WHY COSTS ARE GOING UP So why the big rise? The basic price of a funeral, once you strip out the optional costs such as flowers and a wake, is £3,091. This is made up of four elements: the funeral director’s fees; death certificate; the cost of

The main reason for this rise is that councils are having to spend large amounts of money bringing crematoriums into line with new laws concerning their emissions. Prices are also rising because “local authorities are turning to cremation income following budget cuts,” says Simon Cox, head of life planning, at Sun Life Direct. When Sun Life surveyed funeral directors, more than a third said they believe one reason for the rise is that cremation fees are an easy source of income for local authorities. But it’s not just the local council lining its pockets as not all crematoriums are owned by local authorities – funeral directors now own more than 50 of the 260 in the UK.

Unfortunately, opting for a burial won’t save you money as fees rose by 13.4% on average last year, according to Sun Life. The average cost now stands at £1,483. The shortage of burial space is the main reason cited but, again, there are suspicions that councils are bumping up the price to cover cutbacks elsewhere. Many of the high street’s most trusted companies are getting in on the rip-off too, offering financial products to cover funeral costs. There can be no doubt that planning for the costs of your final

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order to create custom but, whether a funeral costs £10,000 or £3,500 it’s still a major expense that most people need to plan for.

If you are planning a funeral you can consult the Good Funeral Guide (goodfuneralguide.co.uk) for reviews of independent funeral directors, and you can post recommendations too.

Blog of the month: WHY ARE MORTGAGE RATES RISING?

BY RUTH JACKSON BY

After years of steady mortgage rates, there has been a sudden spate of increases that is causing panic among homeowners. But why are the banks suddenly cranking up rates?

At this point, many people will start muttering about greedy banks. But, while I’m sure the man with his hand on the interest-rate dial has the bank’s bottom line at the back of his mind, it’s not the driving force behind the move.

Lenders have been pretty good to homeowners in recent years, but external events mean things have to change.

For the past few years, mortgage holders sat on a bank’s standard variable rate (SVR) – the rate you move to when your fixed or tracker deal ends – have enjoyed relatively low interest rates due to a couple of reasons.

Firstly, the Bank of England (BoE) base rate has been stuck at 0.5% for three years, which has helped keep SVRs low.

Secondly, in April 2008 the BoE opened a Special Liquidity Scheme (SLS) to improve the flow of money in the banking system. The scheme allowed banks and building societies to swap their highquality mortgage-backed securities for UK Treasury Bills, which are easier to trade, for up to three years. This meant the banks could get hold of cheap funding for their mortgage books. But the scheme closed on 30 January this year, forcing lenders back to the more expensive wholesale markets for mortgage funding.

Another factor that affects mortgages is Libor. This is the rate at which banks lend money to each other. It’s been rising for two years, so getting the money to hand out in mortgages is now more expensive.

With all this in mind, it’s hardly surprising that lenders are starting to increase mortgage rates. It seems the good times for borrowers may be coming to an end. For more on this go to page 16.

8 MONEYWISE | APRIL 2012

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Or email us at letters@moneywise.co.uk Alternatively, you can air your views at moneywise.co.uk on our blog or forum pages. Web

MORE BAD SERVICE FROM SANTANDER

I’ve just come across an article by Jeff Prestridge on moneywise.co.uk about the poor service offered by Santander. I completely agree as I’ve suffered bad customer service from the said bank.

What should have been a simple task of turning my joint account into a single one has taken nearly three months and it’s still not sorted. But Santander has managed to lose documents with all my personal details, including a photocopy of my passport.

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To make things worse, after making a complaint I have now been bombarded by calls from an automated system telling me “how important my complaint is”.

Eventually, after several emails someone did call me, but no apology was given and instead I was fobbed off with excuses about the branch being new and the computer systems not up to speed.

This was a few months ago and I still haven’t had a follow-up call or apology letter but a magic £50 has

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Web Poll: THE UK PROPERTY MARKET HAS SEEN ATHIRDWIPED OFF ITS VALUE SINCE 2007.HASTHE FALL IN PRICES FORCEDYOUTO CHANGEYOUR LIFE PLANS?

21%YES:I wanted to move but I am now staying put

7% YES: I can’t move so I’m focusing on home improvements

23% NO: It’s all relative.The bigger house I want to buy has fallen in value too

49% NO: I don’t care as I am happy where I am been credited to my account. Maybe the bank is sending a letter and it just hasn’t arrived, but I won’t hold my breath. SEAN REILLY/CARDIFF

Moneywise replies: Sadly, you’re not alone and at Moneywise we receive numerous letters and emails regarding the poor customer service at Santander. This is why last year the bank was voted the worst financial services company for customer service by Moneywise readers – for the second year in a row. Unhelpful call centres and untrained staff were the most common complaints.

Jonathan Akerman, spokesperson for Santander, says Mr Reilly’s problem occurred because something went wrong with his account when he first tried to change it. “I can confirm the other party has been removed from the account, and we’re sorry for any confusion or inconvenience caused,” he adds.

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Total votes: 404 Online from 28 February – 5 March 2012

APRIL 2012 | MONEYWISE 9