(Bloomberg) -- Customers of a failed UK funeral services provider Safe Hands Plans Ltd. will get no more than a fifth of their money back.

Approximately 46,000 holders of pre-paid plans sold by Safe Hands, which fell into administration in March, should expect to get between 10% and 20% of their capital returned, the firm’s administrators said in a report seen by Bloomberg. The company promised clients that their funeral costs would be covered by purchasing one of its plans, with money held in a trust to be used after the planholder’s death.

“A significant number of the investments within the trust are illiquid and/or severely impaired, with a large proportion of these funds being held in offshore funds,” accountants at FRP Advisory, a company tasked with winding up Safe Hands, said in the report. 

It estimated that 10.6 million pounds to 16.1 million pounds can be returned to clients, net of costs, compared to 71.1 million pounds worth of claims.

The pre-paid funeral plan sector is bracing for new regulation, with the UK’s Financial Conduct Authority preparing to start overseeing providers from July. It’s a sector that has seen rapid growth in the last decade, with more than 1.6 million plans undrawn in the UK last year, according to the Funeral Planning Authority. The market is dominated by large players like Dignity Plc, but a number of smaller firms, including Safe Hands, have also built up market share.

Safe Hands had initially applied in late 2021 to become a regulated pre-paid funeral plan provider, but withdrew its application after it became clear that the FCA was unlikely to accept it, according to the report. With little prospect of being able to sell plans in the future, and a shortfall in the trust, the company filed for administration, it said. It’s not immediately clear in what assets the company invested. 

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