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Motor retailers leave themselves vulnerable after missing FSA deadline

Auto Network UK, one the UK’s FSA compliance organisation for the motor retail sector, is warning that the small number of applications received by the FSA for direct authorisation could leave thousands of motor dealers without insurance sales revenues in 2005.

  At the deadline of  July 13, the FSA had only received 3,781 applications from the whole of the secondary insurance market  which includes motor retailers planning to sell insurance and insurance related products.

As reported in the July 30 issue of AM – based on a survey conducted by am-online – 42% of retailers missed the deadline.

  “This is hugely worrying because the ‘secondary insurance market’ encompasses a lot more businesses than just motor retailers," says Stephanie Murdoch, managing director, Auto Network UK. 

“In January 2005, new legislation will stop businesses offering insurance unless they either have direct authorisation from the FSA or are an appointed representative of an approved network. So for motor manufacturers with franchise dealers actively involved in selling or advising on insurance products and for independent motor retailers doing the same, there is an urgent need to ensure they are FSA approved.

“For those dealers who did not submit their applications by the July 13 deadline, there will be no guarantee that the FSA will assess their application in time for them to start selling insurance on January 14 2005.  It is a worrying situation.” 

According to Auto Network UK, the procedure for gaining direct authorisation is not as straightforward as many in the motor trade had thought it would be. Feedback received by Auto Network UK suggests that many dealers are confused about how the new regulations will affect them and are concerned about the obligations they have as a directly authorised firm.

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