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Did you know that in 2014 the Financial Conduct Authority (FCA) began a report/investigation into the sale of GAP Insurance in the UK?

 

In 2018 they published their findings. It was called Evaluation Paper 18/1: An evaluation of our guaranteed asset protection insurance intervention.

They found that UK customers had paid a staggering overpayment for GAP Insurance in the region of £76-£121 million. 

 

They also said ... (excerpt taken from the FCA website EP 18/1: An evaluation of our guaranteed asset protection insurance intervention - titled Executive summary 23/08/2021 )

  • vehicle sellers enjoyed a strong point-of-sale competitive advantage, meaning that there was little or no pressure on sellers to lower the price
  • a lack of information, including about alternative providers, prevented consumers from being able to compare products
  • many consumers did not know that they could buy GAP insurance separately (‘standalone’) elsewhere, often at a lower price 

 

To address this, they introduced a package of measures which included ( extract taken from the FCA website section titled EP 18/1: An evaluation of our guaranteed asset protection insurance intervention subsection - We introduced measures to deal with these concerns )

  • making it mandatory for vehicle sellers to provide sufficient information to consumers
  • requiring a pause in the sale (‘deferred opt-in’), meaning that vehicle sellers can start the sales process but cannot conclude the GAP Insurance sale for 2 clear days

 

"We believed that having both time and information would enable consumers to decide whether they need GAP Insurance and to shop around if they do.

 

We expected:

• improved competition between add-on and standalone sellers

• better consumer outcomes during the purchasing process, including – an overall decrease in add-on GAP insurance sales, given our concern about consumers buying, potentially, unsuitable add-on products – more consumers shopping around and buying GAP insurance from standalone providers."

 

If you want to read the full report, please click here, and you will be redirected to the FCA report. 

 

Comment from GAPInsurance123

 

At GAPInsurance123, we welcome the report and genuinely believe that it highlighted the fact that independent providers, such as ourselves, can offer policies at vastly reduced premiums.

 

Before their intervention, from data shown in the report, the FCA stated that approximately 17% of customers would shop around for GAP Insurance.

 

This, they state, has now doubled to 45%. 

 

So to summarise, you do not have to purchase GAP cover from your dealership, or in fact, from anywhere. Thanks to the Financial Conduct Authority (FCA) intervention, you should now be paying a lot less for GAP Insurance too. 

 

Remember, if you buy GAP Insurance from GAPInsurance123, you are buying cover from a company directly authorised and regulated by the Financial Conduct Authority in the UK.