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Is your firm falling in line with FCA GAP sales rules?

The Financial Conduct Authority (FCA) issued new rules governing the sale of GAP insurance in September 2015 which were meant to result in better customer outcomes from more informed purchasing decisions and improved competition between add-on and standalone distribution channels. The rules include:

  • Providing customers with prescribed information about the GAP policy being sold
  • A sale deferral period to prevent GAP being introduced and sold on the same day.


Customer Initiated Purchase (CIP)

When you sell a vehicle to a customer, you may deliver prescribed GAP information on the same day, explaining how the product can protect their investment in the event of a write-off. This should be followed by two clear days when there is no contact before the sale can be completed on the fourth day.

Sales deferral period

In exceptional circumstances, customers are able to initiate a GAP sale within these two clear days however the FCA has stipulated that consumers should not be encouraged by dealers to shortcut the deferral period. Where a customer does purchase a GAP product on the 2nd or 3rd day, it is classed as a Customer Initiated Purchase or CIP.

The FCA has rules governing the monitoring of these CIPs, with expectations that firms will set their own tolerances for high levels, with potential for reviews if these are met or exceeded.

For example, if a firm finds a particular dealership or staff member is completing a high level of GAP sales prior to the conclusion of the deferral period, both distributors and insurers have a responsibility to ensure they are adhering to the rules. In these instances, a review of sales practices may be necessary.


Download our free eBook, FCA regulation changes: have they affected GAP sales, to learn more.


Car Care Plan’s focus on CIP performance


Car Care Plan identified that during 2016 firms were making a conscious effort to adhere to the rules in the majority of cases. Although these results are promising, further CIP reductions can be made during 2017.

The Car Care Plan Compliance Team is working closely with firms to monitor their CIP performance. By identifying and understanding what is triggering CIPs, firms can work to improve the overall percentage and, therefore, fall in line with FCA expectations.

Firms working with Car Care Plan can get additional information about the rules and a report detailing their CIP performance. If your firm does not work with Car Care Plan, you can learn more about GAP Insurance and other products by calling 0344 573 8000, or alternatively, you can email us here.

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