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VW ‘blip’ over warranty approval

Volkswagen has been forced to turn away customers wishing to buy an extended warranty after their standard three-year cover has elapsed – because the company has not yet gained authorisation to sell insurance-based products from the Financial Services Authority.

A spokesman for Volkswagen described the situation as a “temporary blip”.

The extended warranty was being sold to customers through VW’s call centre. As an interim measure, the company has appointed Mondial Assistance to provide an extended warranty product. It offers the same level of cover, at the same price, as the VW product.

The speculation amongst industry professionals at a finance conference last week was that VW had not realised its extended warranties would fall within the FSA’s remit, and had missed the deadline for submitting its application.

The new FSA insurance rules came into effect on January 14.

The irony is that VW required all its retailers to become fully authorised by the FSA, which enables them to sell extended warranty products supplied by other companies.

A VW spokesperson confirmed that the company was not currently FSA-authorised to sell or administer an extended warranty product. VW cars/commercials and Audis are affected; Seat and Skoda are on a separate scheme. He says the Mondial warranty will be available in a “matter of days”, and will be superceded by the VW product once the carmaker has achieved FSA authorisation – which it expects to do within the next couple of months. 

A spokesperson for the FSA declined to comment on the individual case. But he says the FSA has increased its number of field staff and that they are now actively checking for companies that are trading illegally. This is partly in response to complaints from the public, but one of the major sources of information about potential offenders is tip offs from rival firms. 

“Not registering amounts to a criminal offence which could have serious implications for dealers,” he adds.

Close Consumer Finance believes that many dealers have decided against becoming FSA-authorised. It says that less than 10% of its 5,000 dealer customers are authorised, while some that are have indicated that they will not renew next year.

“The cost of becoming authorised is around £3,000 a year with training,” says Close sales and operations director James Broadhead. “Most dealers aren’t earning that level of income.”

And he has a warning for authorised repairers that are not meeting the terms of their approval. “The FSA will see the motor industry as an easy target for revenue generation. Any dealer that thinks otherwise is being naïve,” Broadhead says.

“In about a year from now they will start to target this industry.”

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