Although warranties provided by dealers as part of the sale of goods may not be considered to be insurance products, the RMI is advising dealers to register with the FSA anyway.

Although the regulations seem to offer dealers a loophole, allowing them to avoid registration with the FSA, Louise Wallis, the RMI's business development specialist foresees problems for any dealer that takes this option: “The FSA's decision to exclude this kind of warranty has been welcomed by many parts of the trade as it will give some scope for dealers to avoid regulation, but as they have failed to clarify their definition of an insurance product it is impossible with any certainty say what is included within regulation and what is not.”

Wallis continues: “The FSA have stated that it is for the courts to decide what constitutes insurance. Dealers need to know whether the products they provide are insurance or not. Any dealer who remains unregulated and provides a guarantee style warranty runs the risk that the FSA claim they are in breach of regulations and are acting illegally.” The RMI is advising dealers to register with the FSA, and if it is confirmed later that the products they sell are not FSA-regulated, they should be able to claim their fees back.