We keep up to date on the latest rules and laws surrounding the car buying process; it’s fundamentally in our interest to be ‘in the know’. As such, we are well aware of the rules around GAP insurance selling which were brought into force on September 1st. To cut a long story short, dealers need to provide customers with the following before selling GAP:
- Total premium of the contract to the customer separate from any other price
- Significant features and benefits as well as significant and unusual exclusions or limitations
- Whether or not GAP is sold in connection with finance and that GAP insurance is sold by other providers
- Policy duration
- Whether or not the GAP policy is optional or compulsory
- When the GAP contract can be concluded – i.e. two clear days between proposition and purchase.
In addition, this information must be provided clearly and in a durable (paper or email for example) medium to the customer – it should also be specifically drawn to the customer’s attention.
Funny, then, that a GForcer in the process of purchasing a nearly new car from a well-known franchised dealer received a message stating that they could have GAP insurance for £9 per month on top of their finance, and would they like to agree to it today. Now whilst there is still the follow-up to happen within the dealership at the point of handover, this anecdotal tale does seem to suggest that there are underhand tactics going on.
It may well have been the Sales Executive’s intention to spell out the necessary information to our colleague as per the guidelines, but equally, it’s not good form to call a customer, before they’ve even properly bought the car, to approach them with a GAP proposition. There’s also the potential issue of auditing; if the proper process was found not have been followed, the FCA is likely to come down on the dealer like a ton of bricks. Certainly, the FCA has a history of implementing rules and making an example of a business that doesn’t follow them as a warning to others.
Various industry commentators have stated (accurately or otherwise) that GAP sales in September either fell or remained flat. Dealerweb noted an 11% decline in dealer sales, however AutoWeb stated that there was no discernible impact. It can be noted, however, that in a poll by AM Magazine, 45.5% of respondents to an online survey thought that the FCA rules on GAP would ‘decrease sales significantly’.
What this pulls into focus is the sales process. Sale of goods act, FCA finance regulations, GAP insurance selling; all of these are potential pitfalls for the unwary, or simply the chancers. And in an industry which does excel at customer service, but is still trying to shake off its poor image, it’s imperative that process is there, correct, and fit for purpose.
As mentioned, most dealers have taken into account all of the regulations to which they need to comply and are abiding by them – providing a genuinely excellent customer service. But there is no shortage of irony that a salesperson would push GAP insurance on someone buying a nearly new car, who works for a specialist automotive agency.