Dignity’s biggest investor ‘cannot trust’ chairman as board battle heats up

Dignity’s biggest investor has claimed it uncovered “very serious issues” in the firm’s pre-paid funerals business as it steps up its campaign to oust executive chairman Clive Whiley.

In an open letter to shareholders, Phoenix Asset Management Partners said it can “no longer trust” Dignity boss Mr Whiley due to his actions after raising the matter with him, despite having originally pushed for his appointment at the firm.

Phoenix said: “We don’t think it is in the best interests of Dignity and its shareholders for him to be involved with the business.

“This is because, as part of our work assisting the company this year, we uncovered what we believe are some very serious issues in the prepaid funeral plan business.”

Phoenix, which owns a 29.9% stake in Dignity, said it sent all the information it had uncovered on the pre-paid funerals issues to Mr Whiley ahead of the firm’s annual results.

“In our view, his subsequent actions in dealing with the matter, internally and externally, left us no choice but to seek his removal as a director,” it added.

But Phoenix said it could not reveal further details of the pre-paid funerals issues due to a confidentiality agreement with Dignity.

The latest salvo fired in the tussle with Dignity’s board comes after Dignity accused Phoenix on Tuesday of seeking to take control of the firm without paying a bid premium.

The company will hold a meeting on April 22 for investors to vote on the proposal by Phoenix to remove Mr Whiley and replace him with its own founder and chief investment officer, Gary Channon.

Dignity, the UK’s only listed funeral provider, said the move was “wholly unnecessary” and said Phoenix was acting in its “own self-interest”.

But as the bid to win over shareholders ramped up, Phoenix said: “We tried our very best to work with Clive in a collaborative and transparent way.

“Our approach was not reciprocated, and the pre-need issue was the final straw, so we asked the board to remove him.”

It added: “We must also apologise because we were instrumental in Clive’s appointment.

“We received advice from people we trusted to avoid working with him.

“Regrettably, we ignored them.”

On first calling for the vote to remove Mr Whiley, Phoenix claimed that it is not looking to take control of the board and pledged not to increase its stake.

But Dignity has since revealed that Phoenix was preparing a formal takeover bid for the firm in the second quarter of last year when shares were low, only for the approach to have been shelved as the stock recovered.

The Financial Conduct Authority is set to regulate pre-paid funerals in 2022 following concerns about misleading and high-pressure sales tactics in the sector.

The Competition and Markets Authority (CMA) has also been leading an investigation into the funeral sector, which started in 2018.

Last December, the CMA concluded that funerals were costing consumers too much, and made a series of recommendations.

Dignity has been undertaking a widespread review as part of a turnaround, which is set to conclude in the second quarter.

The firm also refused to disclose details on the pre-paid funeral issues raised by Phoenix.

A spokesman for Dignity said: “The funeral plan sector is undergoing a complex consultation process with the FCA, with regulatory oversight to come into force in 2022.

“It is of the upmost importance that considered and correct process is followed.”