The new FCA GAP rules came into force on 1st September so dealers and GAP suppliers have had five months’ experience at the sharp end of selling under the new regime.
Mike Macaulay, Head of Corporate Sales, gives his opinion on whether the new rules have resulted in a loss of GAP business for dealers.
How is the four-day deferment period working for dealers? From your experience are there any areas of weakness that dealers need to address to achieve best practice?
Time and time again we have witnessed dealer’s capacity to adapt to change and this is what we have seen with the sale of GAP protection since September. Invariably, dealers have welcomed our training and assistance in the creation of processes designed to support a compliant approach to GAP sales.
Some, generally larger, dealers/groups have added GAP to their outbound welcome call programmes, but most have adapted to the four day deferment. Dealers have been very effective at using the period between sale and delivery, Linking the promotion of GAP to the sales/delivery programme, which commonly provides the required four day deferral period and that is in place has proved to be highly effpushing back the ective. The final buying decision by the consumer so that it becomes a natural has inevitably been pushed back in the process and where applicable has now become part of the hand-over process and this is working well.
A positive outcome is that we delivered significantly more training in Q4 and many sales personnel are more confident in the features and benefits of our products and have a greater understanding that GAP is not a generic product; there are differences!
Are there any areas of weakness you have identified that dealers need to address to achieve best practice under the new regime?
A repeated area of frustration we hear is that end users do not understand the reason for the four-day deferment particularly when they wish to take advantage of same day delivery.
Have you seen sales of GAP decrease as a result of the new rules introduced in September?
Our volumes are broadly the same; what we have seen is a subtle change between dealer volumes. Certainly, some have seen sales fall and a small number have opted to cease promoting GAP, but encouragingly we have seen other dealers deliver strong growth. Analysing the growth, it is clear that this group of dealers have has benefitted from training, monitoring and an increased attention to the product and how it is promoted. Dealer margins are under pressure, yet by taking a positive approach rather than see income diluted we see dealers selling more policies, embracing a ‘little from a lot’ income ethos.
Since September, have many dealers pulled out of selling GAP because of the new rules?
A small number of dealers have withdrawn from the promotion of GAP and others have moved to a resolicitation call centre model but these are exceptions. We are working hard to promote the positive outcomes and best practices that have been shown to work. After all, in the showroom every opportunity to increase income and create value with the customer counts!