When “No” Apparently Means “Sell It Anyway”: Re-Educating FOS on GAP Insurance, Yet Again

There are times when a complaint file lands on your desk and you wonder whether anyone at all has read the paperwork.

This is one of those times.

In this case, the dealership’s own Demands & Needs statement recorded that the customer answered “No” to the question of whether he saw a need for the GAP insurance product. Not “maybe”. Not “unsure”. Not “I’ll think about it”. A clear and unequivocal “NO”.

And yet, despite that, the dealership (Perrys) went ahead and sold the policy anyway.

That should be the end of the argument. The firm’s own documentation recorded that the customer did not identify a need for the product, and the product was still sold. It is difficult to imagine a more obvious example of a sale contradicting the very compliance document supposedly designed to justify it.

But, as ever, common sense is too often in short supply when FOS gets involved.

So what was the investigator’s answer?

The investigator suggested that the customer had the benefit of the cover.

That is exactly the sort of reasoning that turns a supposedly independent dispute resolution service into an exercise in excuse-making.

Of course the customer had the “benefit of the cover” in the most theoretical sense. That is true of almost any insurance product ever sold. Travel insurance has a benefit if your holiday goes wrong. Home insurance has a benefit if your house burns down. Pet insurance has a benefit if the dog becomes ill. The point is not whether a policy could, in some hypothetical scenario, produce a benefit. The point is whether it was wanted, needed, and properly sold.

That is where this sale falls apart completely.

What is the point of a Demands & Needs statement?

Seriously, what is the point?

If a customer can expressly state that they do not see a need for a product, only for the product to be sold anyway, and for that sale to later be defended on the basis that the customer might have benefited from it under some imagined future scenario, then the entire Demands & Needs process is meaningless.

At that point, the form is not a safeguard. It is not evidence of a compliant sale. It is not proof that the customer’s circumstances were considered. It is just a prop. A bit of paperwork to wave around until it becomes inconvenient, at which point it can be ignored.

That is the absurdity at the heart of cases like this.

The industry loves forms, scripts and signatures when they appear to support the seller. But the moment the paperwork clearly undermines the sale, suddenly we are told not to focus too much on what the customer actually said, because perhaps the product might have been useful after all.

That is not regulation. That is not redress. That is not adjudication. That is damage limitation.

The dangerous logic behind this excuse

If FOS is going to accept the argument that an “add-on” insurance product was acceptable simply because it could have offered some benefit, then every mis-sale becomes capable of retrospective justification.

• Did the customer say they did not need it? Doesn’t matter, it might have helped.
• Did the documentation contradict the sale? Doesn’t matter, there was still cover in place.
• Was the product unsuitable, unwanted or unnecessary? Never mind, there was a hypothetical scenario where it may have paid out.

That logic destroys the whole concept of needs-based selling.

By that standard, virtually any add-on insurance can be defended after the event. And if that is where FOS has got to, then firms will quite rightly conclude that compliance documents do not need to be accurate, meaningful or respected. They merely need to exist.

That is a disgraceful message to send.

Once again, consumers are expected to fight the obvious

What makes this even more frustrating is that this is not a finely balanced case. This is not some complicated legal puzzle. This is not a nuanced dispute requiring academic debate.

The customer said “NO” to needing the product.

The dealership sold it anyway.

Its own paperwork contradicts the sale.

This should not require a battle. It should not require “re-educating” the Ombudsman Service on the purpose of its own regulated sales documents. And yet here we are, once again, spelling out the obvious and pushing back against reasoning that should never have made it out of the gate.

Consumers deserve better than this. Representatives should not have to drag FOS back to first principles every time a plainly defective sale is dressed up as acceptable.

A familiar problem

It is hard not to notice how often this sort of reasoning seems to emerge from people with backgrounds in the very sectors consumers are complaining about.

That does not automatically make an outcome wrong, of course. But it does little to inspire confidence when obvious consumer harm is brushed aside in favour of the same tired, industry-friendly logic: yes, the paperwork is poor, yes, the sale looks questionable, yes, the customer said no, but perhaps there was still some benefit.

That is not a serious way to resolve complaints.

That is the language of a system far too comfortable explaining away misconduct.

The case has been escalated, as it should be

Needless to say, the complaint has been escalated.

Because if a Demands & Needs statement recording that a customer did not see a need for GAP insurance is not enough to demonstrate that the subsequent sale was fundamentally flawed, then the industry and FOS may as well stop pretending these documents have any purpose at all.

You cannot tell consumers their needs matter, ask them to confirm whether they want a product, record a clear “no”, and then later shrug your shoulders and say the product might have been beneficial anyway.

That is nonsense.

We trust that, at the next stage, common sense will prevail.

Even at FOS.