GAP pricing transparency would be the biggest single advantage that the FCA could provide to help new and used car customers make more informed choices.
The Warranty Group divisional director Ciaron Whelan (pictured) says that instead of the price being revealed to the customer only at the point of purchase, it should be made freely available in all marketing material, especially the dealer’s or distributor’s website.
Whelan said: “The FCA’s approach is based on the notion that competition will increase by restricting the sale of a policy at the point that a customer chooses to purchase a vehicle, but there is no evidence to support this argument.
“Our belief is that the single biggest thing that could be done to help customers is to stipulate a completely transparent approach to pricing.
"The GAP price should be added to all dealer marketing material so that customers can have access to the price even before they walk into a showroom. Also, they should be reminded that competing GAP products are available elsewhere.
“The best way to ensure that customers make an informed decision is to ensure that they know exactly what they are buying and exactly how much they are paying for it.”
Whelan added that the FCA proposals, in their current form, may result in some dealers deciding to move out of the sector altogether.
“Post-FCA, the vast majority of dealers – those who offer a market competitive GAP product in professional manner – will continue to sell policies in similar quantities as previously, we believe.
“These dealers know that to achieve success, as with any insurance or warranty product, a structured approach is essential. It is a question of ensuring that GAP is introduced into the sales process at an appropriate time and is properly explained to the customer by a sales person who has been specifically trained to do so.
"In addition, there should be a fast, easy and effective administration process surrounding the policy,” said Whelan.