The National Franchised Dealers Association (NFDA) says the Financial Conduct Authority’s (FCA) proposals could leave thousands of motorists with inadequate insurance cover, leaving dealers reluctant to sell it.

In ‘Guaranteed Asset Protection insurance: a competition remedy’, published by the FCA in December, two remedies were outlined to challenge an alleged lack of competition and transparency in the sale of GAP products by dealers. This includes introducing a deferred opt-in programme of four days for GAP insurance to allow customers the opportunity to shop around for other products.

But the NFDA believes dealers should be able to offer buyers GAP insurance on the spot and says the proposals could leave consumers financially exposed with a negative impact on their credit rating. The proposals could see car buyers needing additional credit, which according to the NFDA contravenes FCA guidelines.

Director of the NFDA Sue Robinson said: “The FCA says it is looking to protect consumers and ensure they get value for money, but delaying GAP insurance could ultimately leave motorists in a vulnerable position without the full protection of their car and equity that they need.

“The NFDA has already brought deferral times down from the FCA-recommended 30-40 days to a more reasonable four days, but we feel more needs to be done.

“Over the last few years we have been working with insurers to identify the problems surrounding GAP insurance and how dealers communicate with their buyers. As a result, from April to December last year complaints were down 5% compared with the same period in 2013.”

The NFDA’s submission to the FCA consultation outlines the view that imposing deferred opt-in procedures is often impractical for consumers and doesn’t take into account the fact that only 2% of car sales are same-day purchases.

The FCA invited submissions from the motor industry on its proposed remedies for GAP selling with the final remedies expected to be announced in June. Changes are expected to be implemented from September 1.