Friday, 26 June 2015

NEWS - ALA Gap Insurance embraces industry change from the FCA

The FCA recently announced its final policy statement in the Guaranteed Asset Protection (GAP) insurance market. The new rules require sellers to provide prescribed information before a GAP contract is concluded, and for all firms to adhere to a four day deferral period. ALA hopes that these new rules will have a clear impact on consumer behaviour. Consumers will be able to make more informed decisions regarding GAP insurance and the rules will encourage better competition between stand-alone and add-on GAP firms.

ALA CEO Simon England said: “We understand that buying a GAP insurance policy can often be a complex matter and we pride ourselves on giving open and honest feedback to existing and potential customers. We welcome the changes the FCA has made and hope they will bring increased benefits to customers.”

The new rules will take effect on 1 September 2015.

Prescribed information

Before a GAP contract is concluded, a firm must draw to the customer’s attention the following information:
  • The total premium of the GAP contract, separate from any other prices 
  • The significant benefits, significant and unusual exclusions or limitations, and cross-references to the relevant policy document provisions
  • The fact that GAP contracts are sold by other distributors (whether or not the GAP contract is sold in connection with vehicle finance)
  •  The duration of the policy
  • Whether the GAP contract is optional or compulsory
  • When the GAP contract can be concluded by the firm
  • The date the above information has been provided to the customer.
This information must be communicated in a clear, accurate manner, and in writing or another durable medium.

Deferred opt-in for GAP contracts

The new rules state that a GAP contract cannot be concluded by a firm with a customer until at least two clear days have passed since the prescribed information has been provided. This amounts to a “four day” deferred opt-in period as originally planned.

The customer can choose to initiate the conclusion of the contract faster, for example, a day after the prescribed information has been given.

For further information about FCA industry changes, go to: http://www.fca.org.uk/static/documents/policy-statements/ps15-13.pdf For more information about ALA Insurance, visit http://www.ala.co.uk

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