A funeral company that was the subject of a public warning from the City regulator has collapsed with a £20 million deficit, more than half of which is owed to its thousands of customers.

One Life Funeral Planning appointed administrators in November after the Financial Conduct Authority rejected its application for authorisation and raised concerns about its practices.

A report from administrators at Quantuma Advisory shows that about 13,700 customers, many of them elderly, were holding funeral plans with the Sheffield-based company when it failed.

Its estimated deficit of £20 million includes £11.4 million owed to customers because of a shortfall in a trust that was holding their payments for future funerals. It is estimated that customers will get back only 2.3p per £1.

One Life, which was only established two years ago, is one of a number of pre-paid funeral plan companies to have slumped into insolvency and been forced to seek to transfer its plans to a provider authorised by the FCA.

The FCA began regulating the market at the end of July after a review by the Treasury and after long-running concerns about conduct in the industry, including high-pressure sales tactics and poor financial management.

Customers of another failed firm, Safe Hands Plans, who are owed an estimated £71.1 million, are likely to get back only between £6.5 million and £10.5 million, according to the administrator, FRP Advisory.

James Daley, head of Fairer Finance, which produced a report in 2017 raising concerns about the market and encouraged regulation, said: “There are serious questions to be asked of trustees.”

One Life’s website had told customers that “your money will be placed into our secure, independently managed One Life trust fund so no matter what — your money will be protected”.

It had told them the trust fund was “separate and managed by one of the UK’s leading investment managers, Investec, and is legally independent from One Life Funeral Planning”.

A spokeswoman for Investec said: “Investec Wealth & Investment managed just over £1 million for One Life Funeral Planning, and this remains in our custody. The portfolio was managed on a standard medium risk growth mandate. We were made aware by the FCA that One Life would not be authorised, and are following the appropriate regulatory guidance as part of any required transfer or wind-down.”

The administrators are understood to believe that customer money not managed by Investec was used to fund the company’s operations.

The trustees are understood to be Trust People in Wilmslow, Cheshire, and Richard Brewster, a director of One Life. Trust People was approached for comment.

Quantuma is responsible for investigating the circumstances that led to One Life entering administration and will make a report to the Insolvency Service if it suspects any wrongdoing.

The FCA is in contact with Quantuma and with authorised firms that have been approached over a potential transfer of the customer book.