There are some upcoming changes likely to be made very soon by the Financial Conduct Authority (FCA) to the way that dealers and finance houses sell GAP insurance to their customers.
Their in depth research has unearthed a large number of concerns, or “negative outcomes”, particularly in terms of a lack of transparency in the sales process, extremely high prices charged by the dealers and a the need to give consumers the chance to better understand what they are buying.
Many customers are unaware or unclear about several things to do with GAP insurance namely:
- That it exists in the first place – most customers never intend to buy GAP insurance until the dealer springs it on them the day they go to collect their car!
- What the policy is intended to do or how they would benefit from it if their cr was written off.
- That there are alternative suppliers of GAP insurance, with a large number of customers unaware that they could purchase cover elsewhere and as many as 58% of customers not shopping around for alternative cover.
Price is a major issue with dealer sold GAP policies. ALA have heard from our customers for a number of years about some of the premiums dealers charge for policies and that, often, it wasn’t explicitly offered by the dealer but simply added onto their invoice. It hasn’t been uncommon for people to only realise later that they were paying several hundred pounds more than they originally thought for a GAP policy that they may not want!
The FCA has proposed the abolition of “pre ticked” boxes as it stops customer engaging in or being fully aware of the purchase – a massive 69% of customers could not accurately state the price they paid for the GAP policy up to 4 months after. They also suggest a movement away from an “opt out” system to a customer being fully informed and actively “opting in” to GAP insurance in all situations.
This is all great news for customers, as it should help them to realise that there are online providers offering more information and a better value, higher quality alternative to the policies sold by dealers and finance companies.
Our MD, Simon England has said that
The proposed changes by the FCA from their report are well overdue. I am confident that consumers will increasingly be able to make an informed choice and save themselves a significant amount of money too without compromising on cover.
We hope to see these changes implemented quickly and dealers monitored closely in order to benefit as many customers as possible.
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