FCA Action on GAP Insurance: 80% of Providers Suspend Sales
The regulator has finally intervened — and the findings are damning
The Financial Conduct Authority (FCA) has taken unprecedented action against the GAP insurance industry. Following a review that exposed shocking practices, 80% of GAP insurance providers have suspended sales. The regulator has made clear: these products do not offer "fair value" to consumers.
The Damning Statistics
The FCA's Value Measures Data report laid bare the reality of GAP insurance sales:
Paid Out in Claims
For every £100 paid in, just £6 was paid out.
Commission to Dealers
The majority of your money never went towards cover.
Sales Suspended
Providers couldn't prove fair value.
These figures are staggering. They reveal an industry that was systematically extracting money from consumers while providing minimal actual value.
The FCA's Position
Sheldon Mills, the FCA's Executive Director of Consumers and Competition, has been unequivocal:
"While GAP insurance can be a useful product, we have seen that too often it does not provide fair value. We expect to see improvements that ensure products genuinely meet customer needs."
— Sheldon Mills, FCA Executive Director
The FCA has warned insurers that they must prove their products offer fair value under the new Consumer Duty rules. Until they can demonstrate this, sales have effectively been halted across most of the market.
What This Means for Past Customers
If 80% of providers can't currently prove their products offer fair value, what does that say about the products they've been selling for years?
The FCA's intervention effectively validates what many suspected: GAP insurance has been systematically mis-sold to consumers who were never told about the enormous commissions being paid to dealers.
If you purchased GAP insurance before this intervention, you may have grounds for a claim — not because the product itself was bad, but because of how it was sold and the information that was withheld from you.
The Consumer Duty Factor
The FCA's new Consumer Duty rules require firms to:
Act in good faith towards retail customers
Avoid causing foreseeable harm
Enable customers to pursue their financial objectives
Provide products that offer fair value
It's now clear that GAP insurance sales practices failed on multiple counts. The commission structures, the failure to disclose alternatives, and the pressure selling at point of sale all contributed to an environment where consumers were not treated fairly.
Why This Is Different from PPI
Unlike PPI, where the scandal took years to fully emerge, the GAP insurance issue has been identified and acted upon more quickly. The FCA has learned from past mistakes and is taking proactive steps.
However, this also means that there is no formal complaints deadline yet. The window for claims is open, but it won't stay open forever.
When PPI deadlines were finally set, millions of valid claims were never made because people didn't act in time.
The Industry Response
The fact that 80% of providers have voluntarily suspended sales speaks volumes. These companies have effectively admitted that their current products and practices cannot meet the FCA's fair value requirements.
This suspension doesn't affect existing policies — if you have GAP cover, it remains valid. But it does signal a fundamental acknowledgment that the industry's practices were problematic.
Your Next Steps
If you purchased GAP insurance from a car dealer or finance provider, the FCA's findings suggest you may have been affected by industry-wide mis-selling. You don't need to wait for a formal redress scheme — you can take action now.
Blue Lion Law can assess your individual circumstances and advise whether you have grounds for a claim. Don't wait for a deadline to be announced — by then, it may be too late.
Don't Wait for a Deadline
Act now while the window is open. Blue Lion Law can assess your claim.