Bereaved families face additional costs and a “bureaucratic nightmare” when they notify financial firms of the death of a loved one, a consumer group has said.
Fairer Finance found that some investment companies continued to collect fees until an account was closed, which could be months after death.
A trade association admitted there were areas where the sector had “missed out”.
Almost half of the savings banks required families to call or visit a branch to notify them of a death.
Fairer Finance found that some investment firms refunded additional fees after a death was reported, and others included fees in their headline fees.
A small number charged additional fees to withdraw funds from accounts when someone died. While the terms and conditions make this clear, the consumer group wants the rules to change.
Investment firms should only be allowed to charge what is necessary to cover their own costs, and it called for a ban on death cancellation and account closure fees.
Tim Fassam, Director of Policy at PIMFA – the Personal Investment Management and Financial Advice Association said: “While we would expect private investment firms to always strive to deliver superior consumer outcomes to their clients, there are clear cases highlighted in this report they will come up short.”
He said a new consumer duty outlined by the regulator – the Financial Conduct Authority – should place more emphasis on giving customers fair value.
“However, it should be noted that closing accounts is a cost to businesses and while the circumstances of this closure are unfortunate, it is not unreasonable for businesses to attempt to recover some of the costs incurred,” he added.
The Fair Finance report was commissioned by death reporting service Life Ledger – a company founded by Ruth Blakemore. She was inspired by the experiences her father Ken and family had after the death of their mother Pat in 2016.
“We found Dad crying,” she said. “We had never seen him cry like that, not even when Mum died. He was surrounded by paperwork and opened up to us about it with some difficulty [previous] some days.
“Father had started to inform the relevant organizations about Mother’s death. He had contacted lawyers and found a copy of her will. Then he tried to contact the building society. This poor old man stood in line alone for quite a while. As it was lunchtime and he was at the front of the line, he was told he needed to make an appointment to meet in person and was turned away.
“Then he contacted her pension fund. They didn’t answer the phone for a while and when they did they gave him another number to call – a ‘dedicated grief helpline’. The emergency number was closed for the day. He contacted her cell phone telephone company. After waiting half an hour he gave up and then we found him.”
The family stepped in to help their father, now 91, who she described as a “straightforward Yorkshireman who takes money matters seriously”. He was determined to settle his late wife’s affairs, but encountered “a mountain of complex administration”.
Aside from investment accounts, the report suggested that financial services firms had little incentive to act quickly and efficiently when notified of a death.
The consumer group said it is costing families millions of pounds a year in ongoing charges for unused services such as subscriptions and unclaimed savings and pension funds, where paperwork and account details have been lost.
It described the reporting process as “antiquated and very paper-based,” with many companies requiring families to send an original death certificate.
Most had no digital way to report a death. This has resulted in people having to wait on phone lines or at a branch to report the death of a loved one at 22 out of 49 savings providers, including high street banks and building societies, it said.
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“Managing the affairs of a loved one after their death shouldn’t be a bureaucratic and traumatic nightmare. In the 21st century we should make better use of technology to simplify the process and take some of the burden from grieving families,” said James Daley, managing director of Fairer Finance.
He called for the creation of digital death certificates.
The Tell Us Once service helps families notify public services of the death of a loved one with a single notification. The information is shared by HM Revenue and Customs for tax matters, as well as departments dealing with welfare, state pensions, passports and driver’s licenses.
Some banks are part of a similar system called the Death Notification Service, although the report says the private sector is more “fragmented” in this area.
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