By Tony Willard

The Financial Conduct Authority (FCA) may seek to remove the point-of-sale advantage from used car motor finance if similar moves with GAP insurance are successful, said James Tew, director at iVendi. (pictured)

“The arguments made against the sale of GAP as an add-on dealer product could potentially be equally applied to motor finance,” he said.

“We would be surprised if this happened, but there are definite parallels between criticisms made of GAP and the way in which used car motor finance is sold.”

Tew said it was difficult to argue the same criticism did not apply to used car motor finance, but any moves to restrict the way finance was sold would have a much greater impact on dealer profitability than GAP.”

He thought the industry may want to look at ways of increasing competition at the point of sale or providing other ways of ensuring that customers demonstrably received a good deal on finance.

“This is an area where we could pre-empt any FCA moves by ensuring that we put our own houses in order,” said Tew. “This could be done in any number of ways – from providing an extended cooling off period or ensuring regular checks to demonstrate competitive motor finance is offered to customers.”

Tew said iVendi was starting to see signs of dealers taking notice of the spirit of what the FCA was proposing in the used car sector, with lower interest rates.

Ciaron Whelan, The Warranty Group divisional director, said little in the FCA proposals should impact on dealer sales of GAP other than customers’ post-purchase confirmation, which the firm opposes.

“Most dealers we work with have a market-competitive GAP proposition with high levels of consumer protection,” he said.

“Many offer a 30-day cooling off period for customers.”