12:31 pm, April 5, 2024
The Financial Conduct Authority is allowing some Gap providers longer to provide the insurance following a crackdown earlier this year.
Car Dealer exclusively revealed in January that the regulator had written to insurance providers warning them it may ‘intervene’ in the market and asked them to voluntarily withdraw their products from sale.
It took the action because it said it was concerned that Gap, which is an important revenue stream for car dealers, wasn’t currently offering ‘fair value’ to customers and said it wanted to ‘see improvements’.
Two weeks later, the FCA confirmed that it had asked insurers to suspend sales immediately.
Then, last month, it asked all Gap providers to pause sales of the product while it investigated further, saying it had sent requests to the last remaining providers of the product to stop selling it by the end of March.
Now, though, the FCA has granted some of the insurance providers a temporary extension on the moratorium, giving them to the end of this month.
An FCA spokesperson told Car Dealer today: ‘We have provided firms in our second stage of engagement, for Gap sales via online distribution channels, a temporary extension on our request to pause sales until 30 April 2024.
‘This is so that customers are still able to purchase Gap Insurance directly while we review responses from firms.
‘The pause in sales agreed with the largest Gap providers, announced in February, remains in effect.’
The FCA has said it is conscious of the impact of the action on customers looking to buy new Gap policies and wants to resolve its concerns concerning fair value as soon as possible, but is adamant it doesn’t intend to ban Gap as a product line or completely restrict people’s ability to buy it.
It added that it stood ready to review firms’ revised proposals as soon as possible, with the view to resolving the issues, and will consider their proposals for different distribution channels, recognising that some channels may be able to address the concerns more swiftly.
Reacting to the news, Simon England, managing director and founder of Gap provider ALA Insurance, said: ‘As a provider of Gap Insurance with a commitment to championing the consumer, we understand the decision of the FCA to extend their review deadline.
‘They need to review all Gap providers’ submissions and to do this properly they need ample time to do so.
‘Our submission has been received and we have been given the authorisation by the FCA to continue to provide Gap whilst they review other businesses’ submissions.’
He added: ‘We believe our submission not only shows our policies and business practices to be of fair value, we also believe the submission illustrates our commitment to our customers in getting top-quality insurance products at a fair price.
‘We go the extra mile in our customer service, which hopefully the FCA has acknowledged, too.’
