GAP Insurance Scandal: Will the FCA Finally Respond Now an MP Is Involved?

Today, 15th October 2026, a serving Member of Parliament submitted our substantive letter concerning the GAP insurance mis-selling scandal to the Financial Conduct Authority under their own cover letter, following a recent meeting to discuss the evidence.

This is an important development in our efforts to secure proper regulatory scrutiny of practices that, in our view, reveal widespread and systemic consumer harm. The concerns include discretionary commission arrangements, price setting by dealerships and lenders, grotesque levels of undisclosed remuneration, inadequate consumer documentation and multiple suitability failings.

The FCA has already been presented with comprehensive evidence of these practices. To date, it has not provided a substantive response addressing that evidence.

Perhaps correspondence from a serving Member of Parliament will finally prompt the engagement that the seriousness of the findings should have secured in the first place.

The evidence concerns a sales model, not isolated mistakes

The central issue is not simply that GAP insurance was expensive, or that it rarely offered fair value. It is how the price was constructed, who controlled it, what those involved stood to gain and how little of that information was disclosed to the customer.

We have obtained documentary evidence of arrangements under which dealerships could determine their own commission, influencing the price paid by the consumer and the amount they retained. The pricing discretion is described in the evidence gathered directly from the businesses involved, and had been submitted to the FCA. (DCA evidence submitted to FCA)

The similarities to the interest-rate-linked discretionary commission arrangements used in motor finance are painfully familiar, with some dealerships being able to increase the customer’s cost so as to increase its own financial reward. The FCA itself recognised the harmful incentives created by that relationship when it banned motor finance discretionary commission models. (FCA)

The evidence also extends beyond dealerships. Our published examination of lender-supplied information has identified arrangements in which some lenders purchased the underlying GAP product, sold it to the customer at a substantially higher price and then financed that price. Where interest was charged, the consumer was therefore borrowing not only the cost attributed to the insurance itself, but also the lender’s retained margin, and paying interest on that margin. To date we have discovered two major motor finance providers that have operated these models, as investigations continue. (Advantage Finance DCA) (Major lender DCA)

Calling the money “commission”, “mark-up” or “profit margin” does not answer the questions that matter. What did the customer understand? How was the price justified? What influence did the financial reward have on the sale? And why was information so central to assessing value not properly explained?

Alongside those financial arrangements, our concerns identify inadequate documentation and multiple suitability issues. The FCA needs to examine the relationship between those failings and the extraordinary rewards available for completing a sale, rather than treating each problem as an unrelated administrative oversight.

The comparison with Plevin is impossible to ignore

In Plevin v Paragon Personal Finance Ltd, 71.8% of the customer’s PPI premium was taken in commission. The amount of that commission and the identity of its recipients were not disclosed. The Supreme Court concluded that the non-disclosure made the relationship between Mrs Plevin and the lender unfair. (Supreme Court UK)

The GAP cases we have examined regularly reveal undisclosed remuneration exceeding that proportion of the customer’s payment. Our previous publications include an example in which a customer paid £429 against a disclosed gross underwriting premium of £57, leaving £372 (86.7% of the retail price), above that underwriting amount. That difference requires a proper explanation of every component retained elsewhere in the distribution chain. (Grotesque commission)

Plevin did not establish a universal percentage at which every insurance sale automatically becomes unlawful. It did, however, establish the significance that exceptionally high, undisclosed commission can have when assessing the fairness of a credit relationship. That is particularly relevant where GAP insurance was financed. (Supreme Court UK)

Against that background, we consider the absence of a substantive regulatory response extraordinary. These are not trivial discrepancies. They concern information capable of fundamentally changing a consumer’s decision to buy the product.

The inadequate 2024 FCA intervention does not answer the historic mis-selling evidence

The FCA cannot credibly suggest that serious concerns about GAP insurance came out of nowhere.

In February 2024, it announced that insurers accounting for approximately 80% of the GAP market had agreed to pause sales. The regulator cited data showing that only around 6% of the amount customers paid in premiums was being paid out in claims, alongside examples of 70% of premiums being paid in commission to those involved in selling the policies. (FCA)

That intervention matters, but it does not answer the concerns we have submitted. Improving the terms on which products are sold in future does not resolve whether customers were previously mis-sold those products, whether the pricing arrangements created unacceptable conflicts, or whether affected consumers should receive redress.

Changing the product going forward is not the same as putting historic consumer harm right.

The FCA must now explain how it is addressing the evidence of discretionary pricing, undisclosed remuneration and suitability failings. Referring back to a fair-value intervention cannot substitute for engaging with the substance of those findings.

The motor finance warning was there in 2016

The parallel with motor finance is deeply uncomfortable.

Paul Carlier has publicly stated that he supplied the FCA and the Financial Ombudsman Service with supporting evidence of the motor finance commission practices in February 2016, and has strongly criticised their failure to act on his disclosures. (Transparency Task Force)

The handling of his early warning subsequently reached parliamentary scrutiny. At the Treasury Committee hearing on 11th February 2025, Dame Siobhain McDonagh raised Carlier’s account of providing evidence in 2016 and questioned how the Ombudsman identifies and escalates problems capable of becoming major consumer scandals. (UK Parliament Committees)

The FCA’s own published chronology records its motor finance findings in March 2019 and the discretionary commission ban taking effect on 28th January 2021. Its investigation into historic discretionary commission arrangements began in January 2024. (FCA)

In our view, that history exposes the danger of failing to respond adequately when detailed evidence first arrives. A problem does not begin on the day the regulator finally announces a major investigation, and consumers should not have to wait for years of complaints and escalating public pressure before the underlying practices receive the attention they deserve.

The FCA should be determined not to repeat that experience with GAP insurance. Yet the lack of a substantive response to the evidence we have provided gives us little confidence that the lesson has been learned.

Parliamentary engagement deserves thanks, and disengagement deserves scrutiny

Wethank the Member of Parliament who agreed to meet, considered the concerns and has today submitted our substantive letter under their own cover letter. Their willingness to place the matter directly before the FCA is a constructive and welcome step.

This is precisely the kind of scrutiny we have been seeking, and we trust the letter will prompt the regulator to examine the overwhelming evidence now before it.

For the record, Jonathan Hinder, another MP we approached, chose to take a different approach when he declined to become involved. We reminded him that the potential impact of this scandal on his constituents deserves proper consideration.

We explained that this is not a request for an MP to decide the outcome of individual insurance complaints, but a request to consider evidence of systemic practices capable of harming the people they represent, and to question whether the responsible regulator is responding adequately.

An MP does not need to prejudge every allegation to ask why comprehensive evidence of consumer harm remains unanswered.

We now await the FCA’s response

The FCA now has our substantive concerns before it under a serving Member of Parliament’s cover letter. We await its response.

What is needed is meaningful engagement with the evidence: the pricing discretion, the full distribution-chain remuneration, the information withheld from consumers, the suitability failings and the implications for historic redress.

An acknowledgement alone will not answer those questions, nor will a general description of the FCA’s responsibilities or a repetition of its previous announcements.

We will continue to document the findings and press for accountability. The absence of a substantive response strengthens the case for asking why the regulator has not addressed it.

The snowball is getting bigger, and the FCA is directly in its path.