News and views from the automotive industry.
GAP sales rules improve customer retailer relations
Car retailers’ relationships with customers have been improved following changes to the way GAP insurance can be sold. The changes, which came into effect in September 2015, included the provision of prescribed information and a deferral period between the supply of that information and the close of the sale.
“The far less aggressive closing process that now applies with the deferred opt-in period has certainly built trust in both the product and the motor dealers selling the product to them,” said Mike Cowling, Head of Products at Car Care Plan. He added: “This has also manifested itself in lower early term cancellations; reduced because customers are now given more time to consider the benefits GAP provides.”
For further information on the Financial Conduct Authority’s GAP sales regulation changes, download our free eBook.
What are the FCA’s GAP sales rules?
The Financial Conduct Authority (FCA) rules were introduced to protect consumers and ensure they get a fair deal when buying GAP insurance. 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 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.
Learn more about incorporating these rules into your sales process by downloading our free eBook.