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FSA Countdown: Sure you filled that form in correctly?

If your company hasn't applied to the Financial Services Authority for authorisation to sell and advise on insurance-related products, you're running out of time. The deadline to guarantee that you become authorised from January 14, 2005, is July 13 – just weeks away.

The FSA says it is “encouraged by the level of engagement shown by the industry” and as of April 30 had received 8,675 registrations for general insurance application packs and 1,896 applications for authorisation (all businesses, not just car retailers). But it also warns that some forms are being completed incorrectly. Its website contains a section detailing common application mistakes and how to avoid them.

Q We are a small independent retailer of new and used cars considering opting out of insurance based warranties and finance. How do we stand if we tell our customers to arrange their own funding and extended warranty and only offer our own in-house warranty on the cars we sell? Are we OK legally to do this and what term of warranty do we need to give (currently we offer three months/3,000 miles)? Kevin Griffin, Kevin Griffin Ltd, Horsham, Sussex

AThere is no legal requirement on a retailer or producer of goods to give any guarantee at all. The Sale and Supply of Goods to Consumers Regulations 2002 are only concerned with the condition of the goods at the time of sale.

Where these regulations differ from earlier legislation is that any fault which occurs during the first six months after purchase is deemed to have been present at the time of purchase unless the seller can prove otherwise.

Some people believe this means a six-month warranty must be provided, but this is not the case. However, it would be advantageous for a dealer to provide a six-month warranty, administered by one of the leading warranty providers, included within the retail price of each used car to protect against the possibility of a claim under the enhanced regulations.

Both CP 150 and Factsheet 10 published by the FSA make it clear that a warranty provided by a retailer without separate charge will not be considered insurance. The dealer funded product referred to should therefore fall outside the scope of regulation provided it is not charged for separately. The dealer may also choose to insure the financial risk arising from a self funded warranty without the transaction falling within the scope of FSA regulation. Adrian Turner – Car Care Plan

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