FCA places pause on GAP Insurance being sold

Following concerns around GAP insurance not offering ‘fair value’, the FCA has now requested all insurers to temporarily stop selling the product while this is under review.

Initially, the FCA had requested around 80% of insurers to stop selling GAP, however, this has now moved to every provider by the end of March to completely stop providing GAP cover.

Car dealers supplying the product can earn a high markup in commission, being paid up to 70% of the sale in commission. On the 31st of July 2023, the FCA launched new rules known as ‘Consumer duty’ which put a bigger responsibility on firms reviewing products to ensure fair value was being met. The FCA conducted their own research and then wrote to firms asking them to provide evidence that GAP policies offered fair value. Unsatisfied with the response the FCA continued its investigation and, for the time being, have subsequently paused all sales of the product.

As a re-seller 1st Choice Insurance has conducted their own in-house review of the product, to ensure fair value was being offered. As part of this review, we considered commissions, conflicts of interests, our providers, and product performance as well as many other factors. We found our offering via our carefully selected providers to be of fair value. We apologise that we are currently unable to assist clients seeking to take out or renew a GAP policy with us.

We will continue to provide updates on the situation as it develops here, so be sure to bookmark the page for future developments.