In its ‘Sector Views’ paper, the Financial Conduct Authority said that the introduction of the GAP rules in 2015 had gone some way to protection customers but there was still some way to go.
In 2015 the FCA started requiring firms that sell Guaranteed Asset Protection (GAP) insurance to give customers more information and allow them two days to consider the cover before buying it.
The FCA said, “This reduced the harm by up to 23% from 2015 levels, but intelligence reports suggest it remains significant. Effective implementation of the Insurance Distribution Directive (IDD) should address this further, although it is too early to tell if this has led to improvement in the value for money of add-on products. Examples of where this harm occurs are car hire excess insurance and rent-to-own accidental damage insurance”.
For more details, please read the FCA’s Sector views
FCA bans motor finance firm’s range of online adverts
This week, the Financial Conduct Authority (FCA) banned a number of online adverts issued by Rix Motor Company Ltd (Rix).
Posts on Rix’s Instagram account and adverts on three of its websites relating to credit broking of car finance breached FCA rules for one or more of the following reasons:
- representative examples of the cost of credit to the consumer were either missing from the advert or unlikely to be seen
- the advert didn’t make clear whether consumers were dealing with a credit broker or a lender
- the advert didn’t specify the legal name of the firm as it appears on the Financial Services Register so that consumers could easily check that Rix Motors was authorised.
Rix has now withdrawn the adverts and the FCA has directed Rix not to breach these rules again. Under the rules, all financial promotions must be clear, fair and not misleading, including on social media.
The FCA previously raised concerns with Rix Motors about its online adverts in 2017 and 2018, which Rix addressed.
Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations, said: 'When customers are buying a car on finance, it is really important that they are able to understand how much is going towards the finance and how much is being spent on the car.
'They always have the choice to get the finance separately, so knowing how much it costs allows them to make informed decisions about whether they are getting the best deal.
'We will not hesitate to take action where we see adverts that don’t allow customers this clarity.'