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Financial Conduct Authority allows ‘significant’ number of firms to resume Gap sales

  • City regulator had said Gap policies weren’t offering ‘fair value’ to customers
  • FCA asked insurance providers to voluntarily withdraw Gap products from sale
  • It also warned it may intervene in the market, which is an important revenue stream for car dealers
  • Now it’s letting ‘significant proportion’ of firms sell Gap again
  • FCA says it’s taken action to improve ‘fair value’

Time 11:56 am, May 24, 2024

A ‘significant proportion’ of Gap providers are being allowed to start selling the insurance again, the Financial Conduct Authority announced today.

Car Dealer exclusively revealed in January that the City regulator had written to insurance providers warning them it may intervene in the market and asked them to voluntarily withdraw their Gap 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, in March, 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 the month.

Last month, the FCA has granted some of the insurance providers a temporary extension on the moratorium, giving them to the end of April.


Today, it said that several firms were being permitted to resume sales of Gap after it had taken action to improve fair value.

The regulator said that firms that had resumed Gap sales had done so with materially lower levels of commission being paid out.

As a result, it said, people who now buy Gap can expect better value cover that suits their needs, with better outcomes.

Sheldon Mills, executive director of consumers and competition at the FCA, said: ‘We took action when our data showed that customers were not getting a fair deal.

‘I’m pleased that, following constructive engagement with industry, a significant proportion of the market is now able to restart sales.

‘Gap insurance can provide a useful service to customers and we continue to work with the rest of the market to address our concerns.’

In 2022, according to the FCA’s value measures data, there were more than 2.4m Gap policies in force.

The data showed that in 2022 only 6% of the amount customers paid in premiums for Gap insurance was paid out in the claims, with some firms paying out as much as 70% of the value of insurance premiums in commission to those who were involved in selling Gap.

The FCA said it’ll continue consider the remaining firms’ proposals to improve value for customers.


Under the Consumer Duty, firms must provide fair value to customers, ensure that products and services meet their needs and provide good customer service.

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.



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