With the countdown clock ticking towards 1st September, the new ‘65’ plate will be uppermost in the minds of people in dealership across the UK. It is also the date when new processes for the sale of GAP insurance must come into force – this will affect all sales and this could well mean those new cars rolling off the forecourts from 1st September.
Our team at AutoProtect has been actively working to ensure every dealer we work with know about the changes and what they must do to ensure compliance with this new FCA requirement. I’m pleased to have this opportunity to highlight the change and the steps required, in a simple format, that I hope can be used in every dealer showroom.
From 1st September 2015, dealers can only sell GAP insurance following a four day deferral period starting when first offering the facility and then registering the customer. Dealers must:
- Provide customers with prescribed information to help them shop around and be more engaged when making decisions about purchasing the product.
- Introduce a deferral period, which means GAP insurance cannot be introduced and sold on the same day.
The new rules apply to the sale of GAP policies to consumers and commercial customers when sold in connection with the sale of a vehicle or other goods and services, for example a credit agreement funding the purchase of a vehicle.
Ten Point Plan for Change
- Ensure every sales person is aware of the changes to GAP sales and the 1st Sept change-over date.
- Check your current GAP/RTI product is fully cancellable and transferable.
- The changes to the sales process come into effect on 1st September, so start to make the changes now – do not wait until change-over day. Remember you need to provide the prescribed information and evidence the four day deferral period for GAP insurance policies concluded after 1st Sept – these may be existing orders.
- All sales documented from 01/09/15 are affected, so create a cut-off of Friday 28th August ensuring that as a minimum all documentation after this date operates to the new standard.
- Prepare and print a ‘Prescribed Information’ form (see indicative content below) unless, or until, you have a digital form available – ensure every customer offered GAP is provided with the form and that you are able to evidence this within your sales process.
- Develop a follow up process to ensure the customer is protected after the four day deferral period.
- Ensure documented evidence is in place for every sale – and keep it safe as it may be needed in the future.
- Keep a record of all GAP sales for future reporting, recording the number of customer initiated sales is a particular requirement.
- Don’t adopt any practice that could be seen as an unfair contract – anything that looks like an ‘opt out’ box should be avoided.
- Don’t stop offering GAP – the FCA’s review recognised that customers buying the product in the showroom were happy with the experience.
What the deferred period looks like
Day 1 – Present GAP and provide the prescribed information to them – keep a record of handover dates!
Day 2 – Nothing can happen, unless the customer initiates a sale – check with your GAP provider on exactly what this means
Day 3 – As per day two
Day 4 – Now the GAP sale can be concluded and documented
This information must be drawn to the customer’s attention and must be clearly identifiable as key information that the customer should read. As a minimum dealers should prepare a form that can be given to the customer, ensuring they are aware of the content.
Before a GAP Contract is concluded all dealers must give the customer:
- The total premium of the GAP contract, separate from any other prices.
- The significant features and benefits, significant and unusual exclusions or limitations.
- Cross-references to any relevant policy document provisions.
- Details on the duration of the policy.
- Information on whether the GAP contract is optional or compulsory.
- Information that clearly outlines that the customer can purchase GAP insurance from other sources.
Included within the pack must be the date on which GAP insurance was first offered – this is the start date for the four day deferral period.
This information must be communicated in a clear, accurate manner, in writing to every customer offered GAP insurance with no exceptions.
Provide a copy to the customer and to assist evidence requirements, a copy for the deal file would be best practice.
We have developed training and processes to support our dealers, but we are aware that not every dealer may be up to speed with what is required of them and that time is short. With this I mind, we hope that this high level overview helps to get everyone on the right track now. It really is very important.
We are taking a very positive approach to the change and urge every dealer to protect themselves and their future profits by adopting a great customer experience. I sincerely hope this count down guide helps. If we can provide any additional help, please let us know.