Following its intervention in the add-on GAP insurance market in September 2015, the FCA has published an evaluation of the effect of its measures.
The measures introduced by the FCA were designed to address the harms identified in its Market Study of July 2014. Their findings then were that the sale of GAP insurance as an add-on, often affected consumers’ decision making and weakened their engagement; and that many consumers were getting poor value from these products, and that there was a lack of transparency and comparability with the general insurance products.
The FCA’s market interventions therefore imposed information disclosure requirements for prospective customers, and a cooling off ‘pause’ in the sale process.
The headline findings from the evaluation were that the FCA’s intervention had had a positive impact overall, with increased consumer engagement, including increased shopping around. One consequence of this was an observed decrease in add-on GAP insurance sales of 16-23%.