Thousands of Scots left 'empty handed' after Family Protection Plan funeral cover policy cancelled

Key Points

Insurer, Maiden Life, cancelled policies, leaving many customers ‘out of pocket’
Many elderly, low-income customers believed they were paying into a funeral plan, but the policy only provided monthly life cover
Some customers paid premiums for decades, expecting five-figure payouts, but now receive nothing
The policies were terminated within the legal terms and conditions and extra time was given for the broker to find an alternative insurer
But there have been calls for the watchdog, the Financial Conduct Authority, to investigate

Thousands of Scottish pensioners have lost out on millions of pounds after policies, which many used to pay for funeral expenses, were cancelled.

The Family Protection Plan (FPP) was created in 1999 and sold via credit unions across the UK.

Policy underwriter Maiden Life has announced it will leave the UK market and the policy has been terminated – so any death from December 1 will no longer be covered.

Many of those who hold the policy have been paying into it for more than 25 years.

Although not strictly a funeral plan, many used the cash benefit for the family in the event of a member’s death for funeral expenses.

Maiden Life, the UK branch of Sweden-based Maiden Life Försäkrings AB, was appointed the insurer of the FPP in 2022 on a three-year contract.

In May 2024, Maiden Life informed CMutual, a specialist credit union intermediary which manages the policy, that its parent company was pulling all business from the UK.

This meant coverage for the FPP would end in May 2025.

According to Maiden Life, the termination date was extended on several occasions to allow for CMutual to identify another insurer to place the program with.

An extended deadline of November 30, 2025, was agreed, however, an alternative insurer for FPP policyholders has not been identified.

Labour MSP Paul Sweeney wrote a letter to the Financial Conduct Authority at the end of last month saying his constituents had been left “desperately scrambling” for a new policy.

He urged the regulatory body to look at the “obligation” both CMutual and Maiden Life have to policyholders.

CMutual said it has only acted as the Credit Union’s broker and “was not, is not, nor ever was” a party to the
insurance policy.

At First Minister’s Questions on October 30, John Swinney said he was “very sympathetic” to those impacted.

He confirmed that he would make direct representation to the Financial Conduct Authority, along with the credit union working group.

The First Minister said: “Credit unions provide an essential foundation in our society, particularly for people who are on low incomes and have low savings levels. It is important that financial security is available to them.”

CMutual has placed other Credit Union life business that Maiden Life insured with another UK insurance company.

Maiden Life commented: “In our dealings with CMutual the interests of their clients and policyholders
have been foremost in our plans.

“As part of closing our life business we ensured we gave CMutual considerable notice to enable them to inform and provide their customers with alternative arrangements.”

CMutual said all members had benefited from cover during their time within FPP.

“The Family Protection Plan is a term insurance policy, not a savings product, so members have been fully covered throughout the years they paid premiums,” a spokesperson said.

“It is a voluntary policy, one that members could choose to join, and it provided a modest benefit upon the death of the member or a family member, who they could add to the policy at no extra cost.”

CMutural said it wasn’t happy with Maiden Life’s decision and, despite its efforts, it had been unable to find a insurer willing to offer cover on an identical basis.

“Ideally, we would like to continue cover, and for our part, we will continue to pursue options to this end,” the spokesperson said.

The FCA have been contacted for comment.