GAP insurance sales nonsense

This month I replaced my car using outright purchase (no finance involved).

The salesman introduced his colleague, who informed me that it was a legal requirement of the Financial Conduct Authority that he talk me through GAP insurance. When I said I wasn’t interested and that I wasn’t prepared to listen, he then asked me to sign to say I refused to listen, which I also refused to sign. It appeared to be nothing more than a sales pitch.

Today I emailed the FCA to enquire about this “legal requirement” to cover GAP insurance when buying a car... no surprise at their answer, it’s not a requirement and they will be looking into the practice.
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Comments

  • phill99
    phill99 Posts: 9,094
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    Having brought a new vehicle less than three years ago for it to be written off by a 3rd party in June, I lost a shed load of cash. I paid £21k for the vehicle and battled to get my insurers to agree an £11k settlement. My replacement vehicle has GAP insurance so it is a decent policy to have.


    However, sharp practices are unacceptable.
    Eat vegetables and fear no creditors, rather than eat duck and hide.
  • I'd have said it was outright fraud. If there was no finance involved GAP would never pay out!

    For a cash purchase you want RTI (return to invoice) insurance.
  • phill99
    phill99 Posts: 9,094
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    I'd have said it was outright fraud. If there was no finance involved GAP would never pay out!

    For a cash purchase you want RTI (return to invoice) insurance.

    It all come under the same banner. I have RTI but it is sold under the GAP Banner.
    Eat vegetables and fear no creditors, rather than eat duck and hide.
  • cte1111
    cte1111 Posts: 7,390
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    I mystery shop car showrooms, and have had this said to me many times. I sometimes try to protest that it is definitely not a legal requirement that they try to sell me something I have already said I do not want, but rarely get anywhere with it.

    It would be interesting to hear if the FCA follow this up, as it is, in my experience, such a common occurrence. Most of the big brand car sales people will absolutely insist on a customer sitting through a full sales pitch for Gap insurance as well as other policies, e.g. Minor Damage Cover, Alloy Wheel Cover, etc. They also insist on including it on any written quotes, as "they aren't allowed not to quote it, if their needs assessment says it is needed". It is very difficult to get a quote for a new car without this happening.
  • neilmcl
    neilmcl Posts: 19,460
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    edited 27 September 2017 at 6:52PM
    OP, maybe you've misunderstood. It IS a legal requirement for car sellers who offer a GAP insurance product to give customers "prescribed information" about the products they are offering, simple as that. Sounds to me like you've made a mountain out of said molehill.
  • neilmcl
    neilmcl Posts: 19,460
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    I'd have said it was outright fraud. If there was no finance involved GAP would never pay out!

    For a cash purchase you want RTI (return to invoice) insurance.
    RTI IS classed as GAP insurance.
  • Thanks cte1111, we had the “full sales pitch” on our last car purchase (also an outright buy, no finance). My OH said to go along with the guy on that occasion and let him waste his time - even though we had no intention of taking any insurance from him.

    This was the response from the FCA:

    “I understand you recently purchased a new vehicle without finance. The motor dealership advised they needed to provide an explanation of GAP Insurance, since this is an requirement of the Financial Conduct Authority (FCA).

    I’ve today checked the Financial Services Handbook and I’ve been unable to locate any rules which would require a motor dealership to provide an explanation of GAP Insurance to a consumer.”
  • neilmcl wrote: »
    OP, maybe you've misunderstood. It IS a legal requirement for car sellers who offer a GAP insurance product to give customers "prescribed information" about the products they are offering, simple as that. Sounds to me like you've made a mountain out of said molehill.

    It’s not making a fuss over nothing, it’s similar to the PPI sales scam of recent times and is basically a sales pitch for insurance using “legal requirement” as a lever...
  • jimjames
    jimjames Posts: 17,532
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    phill99 wrote: »
    Having brought a new vehicle less than three years ago for it to be written off by a 3rd party in June, I lost a shed load of cash. I paid £21k for the vehicle and battled to get my insurers to agree an £11k settlement. My replacement vehicle has GAP insurance so it is a decent policy to have.
    .

    But if you'd sold the car after 4 years you'd still only get back the value at that time? I weigh up the risk vs cost to decide if insurance is worthwhile
    Remember the saying: if it looks too good to be true it almost certainly is.
  • bigadaj
    bigadaj Posts: 11,531
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    phill99 wrote: »
    Having brought a new vehicle less than three years ago for it to be written off by a 3rd party in June, I lost a shed load of cash. I paid £21k for the vehicle and battled to get my insurers to agree an £11k settlement. My replacement vehicle has GAP insurance so it is a decent policy to have.


    However, sharp practices are unacceptable.

    Not quite following this.

    Are you saying you had a 2.5 year old car written off by a third party and received just over half the new value?

    That seems about right, probably better than many offers, do you think GAP insurance would give you a new car?
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