Are you ready? From 1 September 2015, firms selling motor vehicle GAP insurance will be required to:
- Provide customers with prescribed pre-sales information to help them shop around and ensure they are able to make more informed purchasing decisions.
- Introduce a deferral period, which means GAP insurance cannot be introduced and sold on the same day.
For wide ranging information, advice and guidance on the changes, download our FREE eBook: Get ready for FCA Regulation changes in September 2015.
The New Rules
The Financial Conduct Authority (FCA) is introducing these new rules to protect consumers and ensure they get a fair deal when buying GAP insurance. In more detail, they are:
Supplying prescribed information
Before a GAP policy is sold, dealers must give customers the following information:
- The total cost of the GAP policy, separate from any other prices;
- The GAP policy’s significant features and benefits and unusual exclusions and limitations;
- Cross-references to any relevant policy document provisions;
- The duration of the GAP policy;
- Whether the GAP policy is optional or compulsory;
- When the GAP contract can be concluded by the firm;
- The fact that they can buy GAP insurance elsewhere and from other providers;
- The date this information was provided to the customer.
The FCA has also stated that the information must be conveyed clearly and accurately as well as in writing (or another durable medium). The information must also be drawn to the customer’s attention and identified as important for them to read and understand.
Deferred opt-in period
A dealer cannot conclude the sale of a GAP policy until at least 2 clear days have passed from when the customer was provided with the product information detailed above. For example:
- Day 1 – Prescribed information provided
- Day 2 – Clear day – no customer contact
- Day 3 – Clear day – no customer contact
- Day 4 – Complete sale / contact customer
In exceptional circumstances, a customer can initiate a GAP sale the day after the prescribed information has been provided. However, the FCA has stipulated that dealers should not encourage consumers to shortcut the deferral period.
Incorporating the rules into your sales process
The FCA has not defined exactly how the new rules should be incorporated within your current sales process to ensure compliance; there are, however, two examples outlined below:
Most applicable to customers visiting dealerships, where there will be 4 days between point of order and point of delivery.
Most applicable to dealers where contact is initially made via email or website, or where it is important to get the prescribed information to the customer quickly. For example, where point of order and point of delivery may be quicker than 4 days.
If you would like additional information about the FCA’s new rules, please contact Car Care Plan.