The Competition and Markets Authority (CMA) is to review the UK funerals market to ensure that people are not getting ripped off.
The study will examine whether the information provided by funeral directors on prices and services is clear enough for people to be able to choose the best option for them.
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The watchdog will also look at how prices have changed over time and the factors that affect them.
According to the CMA, the average cost of a funeral in 2017 was nearly £3,800 for the basic package, while extras could typically add £2,000 to the total bill, the CMA said.
The rising level of cremation fees will be considered as part of the review, with cremations now estimated to account for around 75% of all funerals.
“People can understandably be very emotionally vulnerable when planning a funeral. We therefore think it is important that – at what can be a particularly challenging time – the process is made as easy as possible,” said Daniel Gordon, the senior director of Markets at the CMA.
“As part of this study, we want to ensure that people can at least receive clear information on prices and the services making up a funeral, and that people get a fair deal on the cremation fees charged,” he added.
Retail analyst Nick Bubb said the CMA’s decision seemed at odds with this year’s trading updates from Dignity PLC (LON:DTY), the listed funeral services company.
“The Dignity share price has recovered a fair way of late, after the bashing it took at the beginning of the year on the back of the price war, so it will be dismayed to hear this morning that the wretched CMA has the time (despite having to look at the Sainsbury’s/Asda merger) to launch a review into the £2bn funerals market ‘to ensure that people are not getting a bad deal’,” Bubb said.
“An interim report, presenting initial findings and views on potential remedies, will be published in six months, ahead of the final report in a year's time,” he added.
The UK funerals market is estimated to be worth more than £2 billion a year. The CMA estimates that there are around 5,000 funeral director branches and 294 crematoria currently in operation in the UK.
Shares in Dignity opened 12.3% lower at 1,066p.