The Retail Motor Industry Federation (RMIF) has criticised the UK government regulatory body, the Financial Services Authority (FSA), following a survey of members over the fairness of annual costs associated with insurance sales by car dealerships.
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The RMIF said the current regulations governing car dealers’ insurance sales are affecting retailers’ profits.
Just over half (53%) of dealers surveyed said that recently introduced new regulations have delivered little or no benefit to dealerships and their customers when compared with the cost to dealers of compliance.
RMIF chief executive Matthew Carrington said: “The FSA (Financial Services Authority) insurance regulations could change the face of the motor insurance market as we know it, threatening motor retail business and restricting consumer choice.
“The results of this research confirm the sector’s worst fears about the impact of the FSA regulations on the automotive insurance market.”
The survey found that the annual cost of compliance with the new regime is, on average, GBP4,600 per outlet. The RMIF say this sum ‘grossly’ outweighs the GBP1,000 worth of insurance sold by 20% of dealers each year.
The survey also found that 89% of dealers say the regulations have increased the time it takes to sell insurance, with a quarter reporting a decline in income from insurance sales.
FSA spokesperson Robin Gordon-Walker said: “We have worked hard, in consultation with the industry, to develop a regulatory regime which is proportionate, given the legislative requirements.
“We are conscious of the burden which the new regime imposes especially on small firms such as members of the RMIF, and our aim is to keep this to a minimum. If the RMIF have suggestions for how we can improve, I hope they will let us know.”
