September 1st 2015 heralded the introduction of the new 65 plate vehicles on to the roads of the UK. It also saw the implementation of new rules, set by the Financial Conduct Authority, on how ‘add on’ sales can be concluded for the likes of Gap Insurance. Add on sales primarily take place where a motor dealer tries to sell you an additional product on the back of selling you a vehicle. This is the case with Gap Insurance.
The original investigation into the sales of these products was begun by the old FSA a few years ago. There have been concerns that consumers were not aware that products such as Gap Insurance could be purchased away from the dealerships, and often they end up vastly overpaying for the product.
A typical Combined Return to Invoice Gap is offered in a motor dealer at £399, whilst comparable independent sources can provide the product for as little as £69! Often motor dealers try to justify the difference in price with a multitude of reasons, but in truth the independently sourced products can offer far better features, and offer better flexibility than the products bought through the dealers.
The FCA have now implemented new rules aimed at allowing consumers to explore their options fully. This includes a 4 day ‘deferred’ period where the motor dealer can introduce the product, and then not conclude the sale until the 4 day window has passed. This time can then be used to compare products in the market, and make a decision accordingly.
Where motor dealers have dominated this marketplace traditionally, the evolving independent market has grown significantly in the last few years. The new rules will bring independent providers into the spotlight. If you have ever bought Gap Insurance from the dealer did they ever tell you that you could buy cover elsewhere? Well they are required to now.
The new rules are aimed at giving consumers more options, better value and potentially much better cover.
How are the new rules being implemented by motor dealers? Well the FCA have allowed the dealers to effectively implement new sales systems as they see fit. Without close examination it will be interesting to see how dealers adhere to the new rules.
The motor industry have complained that this new 4 day rule could leave consumers exposed if they drive away from the dealer without cover. The good news is that most of the online providers have extremely easy websites to navigate via your smart phone, or free phone numbers to call to set up cover. If you are sat at your dealer and want cover as you drive away, then a quick purchase online will take you about 10 minutes and could save you hundreds of pounds!!