When the dealership tried to time-bar a GAP complaint… and accidentally made it much worse

Every now and then a business response lands on your desk that’s so confidently wrong you have to check you haven’t misread it.

This week’s contender is a dealership that tried to argue that it didn’t receive any commission (only profit), and that any GAP insurance complaint was out of time, and that the Financial Ombudsman Service (FOS) therefore couldn’t look at it.

What made it genuinely baffling is that we had already pointed out, in plain English, why the dealership’s position didn’t stack up as the consumer had never been given the salient facts. Namely, the remuneration it was paid for selling the GAP product.

If you don’t disclose the thing that turns a “normal sale” into a breach of fair value it’s very difficult to credibly argue the customer should’ve clocked the problem years ago. The stopwatch doesn’t start if you refuse to tell anyone what time it is.

The 6-year / 3-year rule, you can’t “know” what you weren’t told

FOS time limits are broadly built around this idea:

• you usually complain within 6 years of the event; or
• if not, within 3 years of when you became aware (or should reasonably have become aware) you had cause to complain.

That “became aware” part matters. Because awareness isn’t magic. It depends on what the consumer was actually told and what was kept conveniently off the paperwork.

When commission and fair value is at the heart of the complaint, the commission figure isn’t a trivial footnote. It’s the salient fact. And if it isn’t disclosed, it’s impossible to argue the “3-year clock” has even started ticking.

So when a dealership responds with “out of time” while simultaneously having failed to provide the key facts needed for the consumer to understand what went on, it’s not a defence. It’s an admission that the defence depends on the consumer staying in the dark.

Surprise, amplified as we evidence a DCA sitting inside the GAP sale

Our surprise didn’t stop at the time-bar attempt, it grew legs and ran a marathon.

We have evidenced the existence of commission received by the dealership (contrary to the dealerships assertions), and that there was a discretionary commission arrangement (DCA) within the GAP sale.

Yes, you heard that right, DCA within GAP sales.

We evidenced the dealership was able to set its own commission within a cap set by the GAP administrator.

That alone should be enough for any sensible firm to pause and think “Is this going to look like fair value? Is this going to look like a conflict? Are we comfortable defending this?”

But then the situation escalated.

The moment it went from “problematic” to “what on earth were you thinking?”

We’ve further evidenced that the dealership didn’t just operate within the cap.

It went beyond it, and way beyond it.

Let that sink in. If the administrator set a maximum commission under the dealership’s agreement and the dealership exceeded it, that isn’t merely “commercial discretion”. That’s potentially breaching its own agreement and detonating any remaining argument that the product was sold with even a passing resemblance to fair value.

At that point, trying to time-bar the complaint isn’t just bold, it’s self-sabotage.

Because the obvious question becomes:

Why would a dealership want FOS anywhere near this?

If you believe you delivered fair value, transparency, and compliant conduct, you welcome scrutiny.

If you don’t, you usually don’t try to invite the referee onto the pitch, hand them your rulebook, and then loudly explain you ignored the rulebook.

Yet that’s what this feels like.

The “fair value” elephant in the room

One of the core issues in these kinds of GAP cases is fair value.

A basic, common-sense way of looking at it is:

• what did the underwriter / insurer component actually cost, versus
• what did the consumer pay at the point of sale (and, in many cases, finance)?

When commission is very large (as it generally is within GAP sales chains) it impacts fair value beyond any reasonable argument. When that commission is discretionary (and especially when it’s pushed beyond an agreed cap), it almost becomes impossible.

This is a witches cauldron mix of PPI and motor finance commission.

And then there’s the FCA… still “asleep at the wheel”?

We’ve provided the FCA with our evidence within GAP. We’re still waiting for a response.

And, honestly, that lack of urgency feels depressingly familiar.

The FCA has history here. In motor finance, unfair commission arrangements were brought to its attention way bak in 2016.

Fast forward, and the FCA has since banned discretionary commission arrangements in motor finance, but consumers are still waiting for fair compensation.

So when firms and consumers raise “commission + discretion + poor value” concerns in adjacent product lines, you’d expect the regulator to be wide awake.

Instead, too often, it feels like the FCA is hitting snooze again while the same underlying behaviour simply reappears wearing a different product label.

What this means for dealerships and lenders

If you sell or finance GAP (or you advise on it), here’s the blunt takeaway:

1. Time-bar arguments are not magic words to make a complaint disappear. If the consumer wasn’t given the salient facts don’t be shocked when FOS decides the complaint is still in time, and don’t be shocked if you find a legal case against you for the escalation fee.
2. Discretionary commission is a one way ticket to compensation-ville.
3. If you want to argue fair value, bring receipts. Underwriter cost vs consumer price. The bigger the gap, the bigger the problem.

High commission drives a culture of mis-selling, as has been proven time and time again.

Final thought: this isn’t “clever defending”, it’s damage amplification

Trying to brush off a complaint as “out of time” while the key facts were never provided is the regulatory equivalent of saying:

“They should’ve known we did something questionable, even though we didn’t tell them.”

FOS has (correctly) kicked that argument out and confirmed it will investigate.

And given the DCA evidence, the commission cap, and the apparent decision to push beyond that cap… we’re struggling to understand why the dealership would want this complaint reviewed at all.

But since they’ve effectively asked for the spotlight — we’ll make sure it’s turned on properly.

For once, even FOS shouldn’t struggle with this one.