Advantage Finance Discloses the GAP Commission – Only After Its Conduct Is Reported to the FCA

There are moments in complaint handling when a firm’s position tells you almost everything you need to know.

Advantage Finance had every opportunity to deal with our client’s GAP insurance complaint openly, fairly and transparently. It could have disclosed the commission and remuneration connected to the sale of the policy at the outset. It could have properly addressed the complaint on the evidence. It could have accepted that consumers are entitled to understand how much of their premium actually paid for the insurance product, and how much was retained elsewhere in the sales chain.

Instead, Advantage Finance chose the well trodden path of resistance.

It withheld the facts. It attempted to shut the complaint down using limitation. It maintained a position that was unsustainable.

Only after its conduct was reported to the Financial Conduct Authority did Advantage Finance disclose the level of commission and remuneration linked to the GAP premium sold to our client.

When the figures finally arrived, they explained exactly why the firm preferred silence and deflection.

The Customer Paid Just 23.2% Towards the Actual GAP Product

The disclosure shows that, from the GAP premium paid by our client, only 23.2% went towards the actual product.

The remaining 76.8% was retained by Advantage Finance.

That is not a modest commission, nor a marginal sales incentive. It is a grotesque level of remuneration attached to the sale of an insurance product.

When a consumer is sold GAP insurance, they are entitled to believe they are primarily paying for protection. They are not expecting the overwhelming majority of their premium to be absorbed as commission, profit or retained remuneration by the firm involved in the sale.

This is precisely why disclosure matters.

A customer cannot make an informed decision if they are not told that most of the money they are paying is not going towards the insurance itself. A customer cannot properly assess value if the real financial structure of the sale is concealed from them. A customer cannot understand the incentive behind the recommendation if the firm does not reveal how much it stands to gain.

A 76.8% retained remuneration figure is plainly capable of creating an unfair relationship.

Why Was This Not Disclosed at the Outset?

That is the obvious question, although the answer appears obvious now.

If Advantage Finance considered the commission fair, reasonable and defensible, why not disclose it when the complaint was first made?

Why did we have to push?

Why did the matter have to be escalated?

Why did the FCA have to be notified before the key figure was finally provided?

The answer is clear, and the figure is deeply uncomfortable.

It supports the very concern we have raised repeatedly about GAP insurance sales. These complaints are not simply about whether a customer signed a document or whether a policy existed. They are about the fairness of the transaction, the quality of the sale, the suitability of the product, and the undisclosed financial incentives sitting behind it.

Where the majority of the premium is retained as commission or remuneration, it goes to the heart of the relationship between the firm and the customer.

Advantage Finance Then Tried Limitation

As if the commission figure was not bad enough, Advantage Finance also attempted to rely on a limitation argument.

That position was taken despite clear legal precedent being provided to it, including Canada Square v Potter, a Supreme Court decision which directly addresses the relevance of concealed commission and limitation.

It was also taken despite an ombudsman decision on the very subject being provided to Advantage Finance.

This is important, because Advantage Finance was not being asked to consider the issue in a vacuum. It was not being asked to guess the legal position. It was not being asked to deal with an obscure or novel argument without guidance.

The firm was provided with the relevant material, yet it still attempted to rely on limitation.

In our view, that is not good complaint handling. It is obstruction.

Canada Square v Potter Cannot Simply Be Ignored

The Supreme Court’s decision in Canada Square v Potter is highly significant in complaints involving undisclosed commission (profit share or other remuneration).

The principle is straightforward. Where a consumer was not told about a commission arrangement, and where that concealment is relevant to the cause of action or complaint, a firm cannot simply point to the age of the agreement and pretend the consumer should have complained earlier.

How could they complain earlier about something they were never told?

That is the problem with Advantage Finance’s position. It attempted to rely on the passing of time, while ignoring the fact that the customer did not know the key facts. Those facts were not volunteered. They were only disclosed after pressure was applied and after the matter was reported to the regulator.

That is precisely why limitation arguments in these circumstances are so often fundamentally flawed.

This Is About Fairness, Not Technical Evasion

The issue is not just whether a technical limitation argument can be attempted, as experience tells you that firms attempt all sorts of arguments.

The real issue is whether the relationship was fair.

A customer paid for GAP insurance, yet only 23.2% of the premium went towards the product. Advantage Finance retained 76.8%. The customer was not told this at the point of sale, and when challenged, Advantage Finance did not immediately disclose the figure. It then attempted to rely on limitation even after relevant legal and ombudsman material had been provided.

That sequence matters as it shows why these complaints must be properly investigated. It shows why disclosure is essential. It shows why firms should not be allowed to hide behind delay, technicality or selective interpretation when the underlying sale appears fundamentally unfair.

The FCA Has Been Notified

Our reporting of Advantage Finance’s conduct remains with the FCA, as do many other reports and evidence of widespread mis-selling.

We continue to believe firms should be given the opportunity to correct their position when clear failings are identified, but when a firm withholds key information, resists proper complaint handling, and advances limitation arguments despite being provided with directly relevant authority, escalation becomes necessary.

The FCA and Financial Ombudsman Service is in receipt of substantial evidence of this new scandal, and the tactics once again being used by the industry to seek to avoid responsiblity.

We hold all of the names of the relevant people within the regulatory bodies that are in receipt of our submissions, and history will show who acted and who didn’t.

GAP Insurance Complaints Are Not Going Away

The more information that is disclosed, the clearer the picture becomes.

GAP insurance was too often sold with excessive commission, poor disclosure, questionable suitability checks and little meaningful assessment of whether the customer needed the product at all. In many cases, consumers appear to have paid heavily for products that offered poor value, while firms and intermediaries benefited from extraordinary levels of remuneration.

Advantage Finance’s disclosed figure is another example of why this issue must be taken seriously.

A retained remuneration figure of 76.8% is not something that can be brushed aside. It is not a minor administrative issue. It is evidence of a sales structure that, in our view, was heavily weighted against the consumer.

Advantage Can Throw Obstacles in the Way but they Will Be Defeated

Advantage Finance can continue to resist. It can continue to advance limitation arguments. It can continue to make the complaint process more difficult than it needs to be.

But the facts are now out.

The customer paid just 23.2% towards the GAP product. Advantage Finance retained 76.8%. The commission position was not disclosed at the outset. The firm attempted to rely on limitation despite the legal and ombudsman position being put before it. The matter has now been reported to the FCA.

These are not small points. They are central to the fairness of the relationship.

Our position is clear.

Where firms have profited from undisclosed and excessive commission, they will be held to account. Where consumers were denied the information needed to make an informed decision, they deserve redress. Where firms attempt to use delay or technical arguments to avoid responsibility, those arguments will be challenged.

Advantage Finance may throw as many obstacles as it wants.

They will be defeated.