GAP Insurance Mis-Selling: The New PPI Scandal in Disguise?

It’s all starting to feel very familiar.

A financial product, sold widely across the UK. A huge proportion of consumers unaware of how much commission was pocketed behind the scenes. A ‘trusted’ sales channel — usually a car dealership or a lender — pushing a policy that promises peace of mind but offered questionable value.

Welcome to the unfolding scandal of GAP insurance mis-selling — and yes, it bears striking similarities to the notorious Payment Protection Insurance (PPI) debacle that rocked the finance industry and cost lenders over £38 billion in redress.

🔍 What Is GAP Insurance — and How Was It Mis-Sold?

Guaranteed Asset Protection (GAP) insurance is designed to cover the difference between what your insurer pays out if your car is written off, and what you still owe on your finance agreement. In principle, it’s a perfectly valid product — but, as with PPI, it was the way it was sold that turned it into a ticking time bomb.

What we now know is this:

• GAP insurance was frequently added to finance agreements, or paid for via customer deposits at the point of sale.
• In all cases we’ve seen so far, consumers weren’t told that dealers were earning huge commissions for selling the policy.
• Worse still, and based on what we’ve seen, those commissions often made up around 70% of the entire policy premium.

That’s not just a markup — it’s financial daylight robbery disguised as protection.

💸 The PPI Echo: Greed, Misleading Sales, and Hidden Commission

For those who remember the PPI scandal, this all sounds eerily familiar. At the heart of PPI mis-selling was the non-disclosure of commissions and the incentive for salespeople to push a product that suited their bonus, not the customer.

It now appears that GAP insurance followed the same playbook. Despite the public embarrassment and regulatory scrutiny that followed PPI, the finance sector clearly learned little — if anything.

What we’re seeing with GAP insurance is a damning indication that weak regulation and institutional greed have once again taken precedence over fairness and transparency.

📈 70% Commission? That’s Not Protection — That’s Profiteering

From the cases we’ve reviewed, it’s evident that the average commission earned on GAP policies sits around 70% of the policy cost.

Let that sink in: for every £300 you paid for GAP cover, the dealership or lender may have pocketed £210.

How can a policy be “value for money” when over two-thirds of the premium disappears in undisclosed commission before any actual cover is provided?

The issue isn’t GAP insurance itself — it can be a valuable product. The problem lies in the greedy and opaque practices used to sell it.

🏦 The Truth About Redress — and Why Most Victims Never Claim

Even with the PPI scandal — the most well-publicised mis-selling event in UK history — millions of valid claims were never submitted. Many consumers either:

• Didn’t know they had a claim,
• Missed the deadline, or
• Were wrongly told they weren’t eligible.

Despite paying out tens of billions in compensation, lenders still walked away profitable. The system was stacked in their favour then — and, unless people act now, history will repeat itself.

✅ What Can You Do?

If you purchased GAP insurance as part of a car finance deal there’s a real chance that:

• You paid not only for the policy, but also a significant undisclosed commission, and
• You may be entitled to compensation for the unfair relationship that created.

💬 Final Thoughts: The Product Isn’t the Problem — It’s the People Selling It

GAP insurance, like PPI before it, wasn’t inherently bad. It’s the commission culture, lack of transparency, and failure to treat customers fairly that turned a useful product into a scandal-in-waiting.

Once again, the finance industry has shown that profit comes before principle — unless they’re held to account.

Don’t let them walk away again.