Vehicle dealers are giving up on insurance sales due to government over-regulation, according to a new survey from the RMI National Franchised Dealers Association (NFDA), a part of the Retail Motor Industry Federation (RMIF).

The survey reveals that since 2005 the number of dealers with full FSA authorisation has dropped from 76% to 54% now. Meanwhile, the percentage acting as insurance introducers – the least regulated option – has increased from 4% in 2005 to 17% today.

Louise Wallis, the NFDA's head of business development, commented: "Many in the motor trade believe that they should never have been included in the regulations in the first place.

"The complexity and cost involved in being authorised is clearly putting many dealers off, as regulation of insurance sales has created a huge amount of extra paperwork. The volume and complexity of the paperwork is wildly disproportionate to the relative importance of insurance sales for their overall businesses. A number of dealers who originally opted for full FSA Regulation have now looked for alternatives for providing insurance to their customers."

Wallis added: "The NFDA is working with the FSA to try and simplify some of the more complex and time-consuming elements."