From January 14, 2005 insurance sales are to be regulated and those that sell insurance products such as credit protection insurance, warranties, GAP products, and general motor insurance will need to be accredited by the Financial Services Authority (FSA).
By July 13, 2004 dealers must be registered with the FSA in order to receive accreditation in time.
With just days left until the registration deadline, many motor retailers have yet to sign up. Failure to do so will prevent dealers from being authorised to sell insurance and warranty products.
Some of these dealers are being encouraged to become appointed representatives for manufacturers. This would mean that the manufacturer has the responsibility of registering with the FSA, but it also means that the dealer is limited to offering its customers only those insurance products provided by the manufacturer.
According to Louise Wallis, the RMI's business development specialist, dealers do not need to take this route: “A small number of manufacturers are offering dealers the opportunity to become appointed representatives, which will increase control over dealers. The fact that the deadline for registration is less than two weeks away may make the option being offered by manufacturers more attractive than it otherwise might seem.
“Many of our members seem to be resisting this route, and have applied to the FSA directly to become authorised to sell insurance and warranty products in their own right.”
There could be a huge impact for a dealership in not selling insurance products themselves.
Wallis explains: “Research shows that 70% of used vehicles are sold with some kind of extended warranty. It is important not to lose this source of revenue.”
The regulation of insurance mediation will allow the implementation of the European Union's Insurance Mediation Directive (IMD) in the United Kingdom. This is intended to standardise the insurance selling process, and set benchmark standards for the sector.