’In its current form it does not offer fair value and we want to see improvements,’ says executive director
Multiple insurance firms have agreed to pause sales of Guaranteed Asset Protection (Gap) insurance following a request from the FCA.
The regulator said it had identified concerns with the design of Gap insurance across all distribution channels and is requiring firms to make changes.
It came after the FCA highlighted concerns in September 2023 that the product was failing to provide fair value to some consumers.
In turn, it wrote to providers asking them to take immediate action to prove customers were getting a fair deal.
However, after assessing the responses to this request, the FCA was not satisfied and, as a result, has agreed to a pause in sales.
The firms that have agreed to this action account for 80% of the Gap market.
As part of this agreement, they have “committed to make changes to their Gap products to provide better value for customers”, according to the FCA.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “I welcome the agreement by firms providing Gap insurance to pause sales while they work on improving value for customers.
“Gap insurance can provide a useful service to customers, but in its current form it does not offer fair value and we want to see improvements.”
This came after the FCA told Insurance Times last week (2 February 2024) that it was “disappointed with the market’s response to our warnings to improve the value of Gap insurance for customers”.
The regulator will carry out a second tranche of engagement with the remaining 20% of the Gap market, with the aim of improving the value of the product across all firms.
They have agreed not to use new distributors of Gap in the interim.
’We will continue to work closely with firms as we carry out further engagement to resolve these issues and ensure customers are getting fair value products that meet their needs,” Mills said.
His career began in 2019, when he joined a local north London newspaper after graduating from the University of Sheffield with a first-class honours degree in journalism.
Now working within the insurance sector, James has a particular focus on motor, M&A activity and financial reporting.View full Profile