Funeral Director Code of Practice: business and regulatory impact assessment

4 Financial impacts of Funeral Director: Code of Practice

According to research published by the UK Government in 2020, the most frequently cited negative impacts of regulation are financial cost and time.^[10] The research notes these impacts tend to be felt most acutely during the first year of compliance due to the need to amend systems and processes and purchase additional equipment. We expect the impact of the Funeral Director: Code of Practice to follow a similar journey.

In phone calls with islands-based funeral directors, no significant impacts to island communities, compared with other rural areas of Scotland or small businesses on the mainland, were anticipated from the implementation of the Code.

4.1 Refrigeration/Cold Room Storage

The Scottish Government’s position that refrigeration is a critical element of caring for a deceased person in a dignified, appropriate and respectful manner (paragraph 47). We anticipate that the most significant potential financial impact will relate to the requirement regarding refrigeration (see paragraphs 47-52 of the draft Code).

4.1.1 Initial proposal of set ratio and decision to require sufficient refrigeration

The Scottish Government explored the option to require a set ratio of refrigeration capacity to number of deceased a funeral director business has in their care (1:50) (and initially proposed this in the public consultation and the focus groups).

We rejected the option of having a set ratio of refrigeration capacity because it became clear from the public consultation and further discussions with the sector that a ratio approach would not adequately account for peaks or troughs of the number of deceased a funeral director has in their care. Thus it risked funeral directors not having enough (or having access to enough) refrigeration facilities to store any deceased in their care. Further, it did not encourage funeral directors in the same way to be reviewing on an ongoing basis their refrigeration capacity compared with the number of deceased they have.

Consequently (and as set out in Table 1 above) the draft Funeral Director Code now requires that a:

“funeral director must have on their premises, or have access to, clean and appropriate refrigeration facilities to store the deceased in their care. Where refrigeration is provided by a third party a SLA [Service Level Agreement] must be in place.” (paragraph 48)

“The required refrigeration capacity that a funeral director must have on their premises, or have access to through a SLA, should be sufficient to accommodate persons received in to the funeral director’s care. A funeral director must review their refrigeration capacity at least once per year.” (paragraph 50)

4.1.2 Scottish Government Refrigeration Survey – April 2023

In April 2023 officials published a brief survey on their public Funeral Industry News blog,^[11] asking for responses from Scottish funeral directors about their access to refrigeration. Ninety-one funeral directors responded. Of these, 79 (86.8%) confirmed that their business had refrigeration or cold room storage for storing the deceased. However, this survey is limited because respondents were self-selected, and because responses were anonymous, we are unable to determine whether any of them are also members of NAFD, SAIF or are operated by Co-op or Dignity (and thus whether they overlap with the counts provided below).

Of greater use were the additional comments provided at the end of the survey. Additional comments overwhelmingly expressed support for bringing in a refrigeration requirement. Indeed, strong language was used such as refrigeration needing to be a ‘red line’ or ‘imperative’ for forthcoming legislation, that refrigeration should be a ‘requirement’ and ‘compulsory’ for funeral directors to provide quality care for the deceased, and that it is ‘immoral’ and there is ‘no excuse’ for not having this equipment. Further, it was noted that any costs of investment in refrigeration were worthwhile and necessary (for both small and large businesses), and that some companies who do not have refrigeration still charge the same prices as those who do.

No comments were received to the survey which were explicitly against a refrigeration requirement. However, one comment seemed to indicate they did not think this was required, noting they had been in the profession for many years and had never perceived a need for refrigeration, citing that they immediately prepare and coffin the deceased upon collection.

4.1.3 Trade associations’ refrigeration requirements and coverage

SAIF Scotland requires all members to have their own refrigeration within their premises or premises they have sole use of and control over. They have a minimum requirement of one refrigeration space for every 50 funerals per annum. Applications for SAIF membership will be rejected if they do not comply with this requirement, and members face expulsion from SAIF if they become unable or unwilling to continue to meet this requirement. At time of the communication between SAIF Scotland the Scottish Government in March 2023, all of SAIF Scotland’s members meet this requirement.

The NAFD’s Funeral Director Code (inspected against by the Independent Funeral Standards Organisation (IFSO)) includes outcome 2.3: ‘You either have suitable refrigerated mortuary facilities or have access to suitable refrigerated mortuary facilities by virtue of an enforceable service level agreement with a third party. IFSO Head of Quality Risk & Compliance, Nigel Cooper, reported on 14 April 2023 that, at time of writing, all NAFD members in Scotland were compliant with outcome 2.3.

4.1.4 Code of Practice Consultations and Engagement – results relevant to refrigeration

The majority of respondents to the public consultation on the Code indicated that the requirement to refrigerate the deceased would not have an impact on a funeral director's business.

A majority also expressed agreement with the initial proposed ratio of the number of refrigeration spaces to number of deceased per year at 1 to 50. However, the open-ended comments demonstrated that this issue is complex and potentially needs greater clarity and flexibility. Most respondents also expressed agreement that there should be flexibility for funeral directors to provide refrigeration either as part of their business model, or to be able to access refrigeration by means of a formal Service Level Agreement (SLA) with a refrigeration provider or another funeral director.

Participants in the SME focus groups agreed that having refrigeration (or access to it through a SLA) was a reasonable requirement and necessary investment cost. They noted, however, that this may be more difficult to install in older or smaller buildings.

Islands-based funeral directors also agreed this was a reasonable standard to have in the Code, noting they had, or had access to, refrigeration or cold storage.

4.2 Possible financial impact of refrigeration requirements

4.2.1 Estimated costs of purchasing and installing refrigeration

If a business decides to invest in mortuary refrigeration the following estimated costs would apply. Officials note that these costs would only be borne by those funeral director businesses who (a) do not already have adequate refrigeration/cold room storage or an SLA, or (b) who choose to purchase refrigeration/cold room storage instead of engaging in a SLA with another organisation.

In April 2023, a representative of SAIF noted to officials that the cost of a 3-berth refrigeration unit to store the deceased would cost approximately £7,000 and last for approximately 15 years. This cost would be borne by the business.

Officials have directly contacted UK-based mortuary equipment providers and have been provided with the following costings and additional information:

We also acknowledge there will be ongoing costs related to energy consumption of running a refrigerated unit, as well as possible maintenance costs. We are aware that many suppliers offer maintenance packages, however these costs would be variable depending on decisions made by the funeral director business in terms of accepting this offer and the coverage they purchased.

It is estimated that a maximum of 100 funeral directors in Scotland (and thus a minority overall) may need to obtain or otherwise obtain access to refrigeration or cold room storage. This is based on the estimate that NAFD and SAIF cover approximately 80% of Scotland’s 500 funeral director businesses (and their reporting that all their members fulfil their refrigeration requirements in their own codes), and a very cautious assumption that no other funeral directors have refrigeration (which is unlikely).

The suppliers listed above provided an estimate of average delivery times from 2-3 days to 2-3 weeks. We are also aware that one provider offers an option to take a ‘lease to purchase’ approach.

Estimates of costs to businesses who still require refrigeration are limited due to remaining unknowns:

• how many businesses have multiple premises which would require the purchasing of refrigeration or cold room storage, therefore increasing costs.
• whether, and how many, businesses could pool their resources to jointly purchase or otherwise obtain access to refrigeration or cold room storage to be shared. This type of resource sharing is not prevented by the Code.
• How many businesses would require refrigeration or cold room storage with a larger capacity than is costed above.
• Costs related to possibly modifying premises prior to installing refrigeration (e.g. room ventilation, ensuring floor is wipeable, etc.)
• Costs related to modifying premises.