Courtesy car provision will be affected by new insurance regulations coming into force next year, and motor vehicle dealers that fail to register could find themselves breaking those rules, the Retail Motor Industry Federation (RMI) has warned.
Louise Wallis, the RMI’s business development specialist, said: “We are concerned that many dealers don’t appreciate that to comply with the new regulations their staff have to be fully trained on the claims handling side of the business within the service department as well as on sales.
“From Friday 14 January 2005 insurance sales are to be regulated and those that sell insurance products such as credit protection insurance, warranties, GAP products, and general motor insurance will need to be accredited by the Financial Services Authority (FSA).
“By today- Tuesday 13 July – dealers must have their applications registered with the FSA in order to receive accreditation in time.”
Failure to register will delay dealers from being permitted to sell insurance and warranty products until they receive accreditation.
Many businesses have already applied to the FSA in order to be authorised to sell insurance and warranty products in their own right, and have put procedures in place to train their sales staff to work under the new regime. However, even those who have applied may have overlooked the need to re-train service department staff. Without this, dealers could find themselves breaking the new rules.
Many services commonly offered by dealers will be affected, including the provision of courtesy cars.
Wallis said: “When a customer is provided with a courtesy car on the dealer’s insurance, this is potentially regarded as a regulated activity and means that the dealer must be authorised by the FSA. We believe that many of our members are unaware of this.”
This will also affect repairers and bodyshops. Although the situation for these businesses is slightly different, they still need to register with the FSA.
Wallis said: “Repair workshops and bodyshops process warranties on behalf of their customers, so they will need to become registered as well. These businesses will not have as many rules to comply with as dealers who sell insurance, but they will still have to comply with some rules, including the need to have Professional Indemnity Insurance (PII).”
This process is intended to standardise the insurance selling process, and set benchmark standards for the sector. The regulation of insurance mediation will allow the implementation of the European Union’s Insurance Mediation Directive (IMD) in the United Kingdom.