Today, Friday 9 February, the Financial Conduct Authority (FCA) has announced that multiple insurance firms have agreed to pause sales of Guaranteed Asset Protection (GAP) insurance, following a request from the FCA.
The firms which have agreed to this action account for 80% of the GAP market.
In September 2023, the FCA wrote to firms manufacturing GAP insurance products asking them to take immediate action to prove customers were getting a fair deal. After assessing the responses to this request, the FCA were not satisfied and, as a result, have agreed this pause in sales with these firms.
As part of this agreement, the firms have committed to make changes to their GAP products to provide better value for customers, in line with FCA rules.
The FCA will also carry out a second tranche of engagement with the remaining 20% of the GAP market, with the aim of improving the value of the product across all firms.
GAP insurance is typically sold alongside car finance. It covers the difference between a vehicle’s purchase price or outstanding finance and its current market value, in the event it is written off before finance has been repaid.