The Competition and Markets Authority (CMA) is consulting on a major probe into the funerals sector following concerns over large price hikes.
It said problems with the market have led to above inflation price rises for well over a decade – both for funeral director services and crematoria services.
The scale of these price rises does not currently appear to be justified by cost increases or quality improvements, it added.
People generally spend between £3,000 and £5,000 organising a funeral, and the price of the essential elements has increased by more than two-thirds in the last 10 years, almost three times the rate of inflation.
Organising a funeral would now cost those on the lowest incomes nearly 40% of their annual outgoings – more than they spend on food, clothing and energy combined.
The CMA said customers could save over £1,000 by looking at a range of choices in their local area, however people organising a funeral are usually distressed and often not in a position to do this, making it easier for some funeral directors to charge higher prices.
Prices are also often not available online, making it difficult to compare options.
The CMA said while some smaller funeral directors have sought to keep their prices low, other providers – the larger chains in particular – have implemented policies of consistently high year-on-year price increases.
Cremations account for 77% of funerals, yet there are limited choices for most people in their local area and fees charged by crematoria have increased by 84% on average in the past 10 years.
Andrea Coscelli, chief executive of the CMA, warned that people mourning the loss of a loved one are extremely vulnerable and at risk of being exploited.
“We need to make sure that they are protected at such an emotional time, and we’re very concerned about the substantial increases in funeral prices over the past decade,” she said.
Ian Strang, co-founder of funeral comparison site Beyond, claimed the UK’s funeral sector has been allowed to become like the Wild West.
“Prices have been climbing unjustifiably quickly, to the extent that consumers are collectively overpaying by £590m a year due to a lack of transparency or accountability – but this stops now,” he said.
Research suggests only 4% of people shop around for funeral options.