Dignity shares soared after the competition watchdog said a surge in demand following the pandemic meant it had to rein in its investigation into prices in the funeral sector.
The Competition and Markets Authority said Covid forced it to curb its investigation as the soaring death toll meant that undertakers and crematoria operators could not provide the necessary data.
It added that restrictions on funerals made it difficult to assess how the market operated normally and local authorities were so stretched that they would struggle to implement any reforms.
The decision came despite the CMA finding evidence that funeral directors did not provide pricing and product information in a way that allowed comparison of providers. Funeral fees also increased at a rate well above inflation for at least a decade, the watchdog said.
Shares in Dignity jumped 38pc to 538p, recovering nearly all of the losses it suffered since the crisis began.
In response to the announcement, the London-listed firm said the industry would "benefit significantly" from proper regulation to ensure that customers can assume high standards and effectively compare services.
The watchdog said it had been considering imposing price caps and tighter regulation on the industry, but could not safely do so during a national emergency.
"On the one hand, it is clear that the funerals sector is not working well and that reforms will be needed. On the other hand, the pandemic has created insurmountable obstacles to some of the solutions needed to design and implement far-reaching reform of the sector at this stage," the CMA said.
It opened the probe last March amid fears that families were being exploited at a time of deep emotional distress by firms selling rip-off funerals and providing a poor service.
As a compromise, the CMA proposed to continue active monitoring of the funerals sector and ordered firms to be clearer about pricing.
It will also make directors provide the watchdog with key financial data every quarter.
Martin Coleman, chair of the CMA panel inquiry, said: "Given the inherently distressing circumstances in which people arrange a funeral, we want to make sure they can be confident that they are not being overcharged and that their loved one is cared for properly –this is what our investigation has focused on.
"The later stages of the investigation have been conducted in the midst of the coronavirus pandemic, which has caused a tragic increase in death rates and has materially changed how funerals are carried out. This has had a big impact on how far we can immediately address some of the issues we have identified.
"Further change in the sector is necessary but some of the remedies we were considering could not safely be introduced in the middle of a national emergency. Our proposals will hold open the door to price controls when circumstances created by the pandemic change sufficiently to permit these to be considered."
Meanwhile, Clive Whiley, Dignity's executive chairman, said the firm has engaged "openly and collaboratively" with the CMA investigation and will continue to constructively engage directly with the watchdog through the statutory process.