This will require firms that sell GAP products to introduce a new selling process which complies with the following rules:
1. Prescribed information
A firm must draw to the customer’s attention a number of pieces of information about the GAP product, in a clear and accurate manner, in writing or using another durable medium. For a full list see the new rules.
2. Two clear days (deferred opt-in)
There must then be two clear days between when the prescribed information has been provided and when the GAP contract can be concluded (sold to the consumer), for example:
Saturday: Prescribed information provided
Sunday: First clear day
Monday: Second clear day
Tuesday: Seller can conclude sale of GAP with consumer
3. Consumer initiates earlier sale
Using the example above the consumer can nevertheless contact the firm on Sunday (the day after prescribed information has been provided) to conclude the sale of GAP if they initiate this, and confirm that they understand, and accept, that they are choosing not to be subject to the deferred opt-in period.
The new rules respond to an FCA market study of General Insurance Add-ons which indicated lack of competition in the GAP market and poor consumer understanding of GAP products. Following earlier discussions with the FLA and other trade bodies, the FCA reduced the period of the deferred opt-in from 30-days to two clear days.
The FLA will be monitoring the impact of these changes on the market closely.