The Financial Conduct Authority (FCA) has revealed that from 1 September 2015 there will be a deferred opt-in for Guaranteed Asset Protection (GAP) contracts of four days from when the customer has been given certain prescribed information about the point of sale insurance product.

The FCA also spelt out what this information was to include:

(a) the total premium of the GAP contract, separate from any other prices;
(b) the significant features and benefits , significant and unusual exclusions or limitations, and cross-references to the relevant policy document provisions;
(c) whether or not the GAP contract is sold in connection with vehicle finance, that GAP contracts are sold by other distributors;
(d) the duration of the policy;
(e) whether the GAP contract is optional or compulsory;
(f) when the GAP contract can be concluded by the firm;
(g) the date the information in (a) to (f) is provided to the customer

An exception has been provided for if the customer initiates the conclusion of the GAP contract, confirms they understand the opt-in rule and consents to the seller concluding the GAP contract early. In this case the seller can conclude the sale of the GAP insurance the day after they receive the above information.

The FCA has been looking at GAP insurance for a while now, having released a preliminary report in July 2014 based on consumer feedback. At the time, it said the majority of consumers didn’t consider a different policy when purchasing the add-on and that 69% did not know how much they had paid for the product.

In December, the FCA launched a consultation paper, which was open until March, which suggested the four day deferred opt-in policy. The regulator received 22 pieces of feedback to this.

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According to the FCA, most respondents said the implementation date of 1 September was too soon, however the regulator said it wanted the new rules implemented in time for September due to the higher number of vehicle sales associated with the month. "It should be possible for firms to make the changes by then," the FCA said.

‘Most’ respondents also disagreed with the proposed four day deferred opt-in policy, with all but one of those who disagreed calling for a shorter period. However the FCA said: "we want to avoid the situation where customers feel pressured by a deferral period that is too short and as a result fail to shop around."

Overall, the FCA estimated that the changes should result in a one off compliance cost of up to £20m, but that customers could save between £31m and £54m annually as a result of the changes.

The National Franchised Dealers Association (NFDA) said it was "frustrated" by the proposal.

Sue Robinson, director of the FCA, said: "is frustrating that the Financial Conduct Authority (FCA) has turned a deaf ear to dealer concerns regarding changes to selling GAP insurance."

While she acknowledged the FCA had made some substantial concessions from the initial proposals (including a 30 day opt in period), she said: The FCA proposals still mean that in the future, consumers will be forced to delay acquiring GAP products and will be unable to conclude a purchase at the same time as they are arranging to buy a car. This will be damaging for car dealers’ business and create unnecessary delays for consumers.

"The NFDA is also concerned that the measures are rushed. The FCA wants to implement their proposals by 1 September 2015. This is simply insufficient time for dealers to ensure that they can comply with new regulations."