FCA issues new update on Gap insurance

The remaining 20% of guaranteed asset protection (Gap) insurance providers have been told they can continue selling the product for the time being.

Earlier this year, the FCA announced that it sent requests to these firms to suspend sales of the product from the end of March.

However, in a statement sent to Insurance Times, the regulator said that it was extending the deadline to 30 April 2024 so customers are still able to purchase the product directly while it reviewed responses from firms.

The pause in sales agreed with the other 80% of Gap providers, announced in February, still remains in effect.

An FCA spokesperson said: “We have provided firms in our second stage of engagement, for Gap sales via online distribution channels, a temporary extension on our request to pause sales, until 30 April 2024.

“This is so that customers are still able to purchase Gap insurance directly while we review responses from firms.”

Submissions

Gap insurance is an add-on to motor insurance that covers the difference between a vehicle’s purchase price and its current market value.

Just two months after the new Consumer Duty rules were introduced in July 2023, the regulator issued a firm statement explaining that it felt the product was failing to provide fair value to some consumers.

According to online provider ALA Insurance, if a business provides a submission to the FCA that shows fair value and best practices, it will be able to continue selling Gap insurance beyond April.

Simon England, managing director of ALA, said his firm had been given the authorisation by the FCA to continue to provide Gap whilst they review other business’s submissions.

“As a provider of Gap insurance with a commitment to championing the consumer, we understand the decision of the FCA to extend their review deadline,” England said.

“They need to review all GAP providers’ submissions and to do this properly they need ample time to do so.

“We believe our submission not only shows our policies and business practices to be of fair value – we also believe the submission illustrates our commitment to our customers in getting top quality insurance products at a fair price.

“We go the extra mile in our customer service which hopefully the FCA have acknowledged too.”