UK car dealers could see profits fall unless they register to sell insurance when new regulations come into force in 2005, the Retail Motor Industry Federation (RMI) has warned.
From 15 January 2005, insurance sales are to be regulated, and those that sell insurance will need to enrol with the Financial Services Authority (FSA). This will cover extended warranties, credit protection insurance (CPI), GAP insurance, and general motor insurance, among others.
RMI business development specialist Louise Wallis said: “To continue selling insurance, members will need to be registered with the FSA. Registration will require payment of a fee and observance of the various requirements and standards.”
The regulation of insurance mediation will allow the implementation of the European Union’s Insurance Mediation Directive (IMD) in the United Kingdom. This is intended to complete the single market in financial services and enable sellers of insurance to compete in European markets.
Wallis added: “Dealers derive a great deal of their profits from the sale of insurance, and a large chunk would be at stake for those that fail to register.”
Dealers that do not register could find their access to the insurance market restricted. Wallis said: “Those that do not register, or do not meet the standards required, will only be allowed to be an insurance introducer. This would mean they could only display leaflets, and would be prohibited from influencing a customer’s insurance-buying decisions.”
Wallis added: “Up to half of dealer profits can derive from the sale of insurance products, and most would hate to lose it as a source of income.”