The wave is coming: GAP can’t be kept quiet any longer

We have said it for a long time. GAP is the next mis-selling scandal. Now the motor finance redress scheme has made it even harder for the FCA, FOS and the industry to keep GAP complaints quiet.

We said it when the industry was still trying to present GAP as a valuable add-on. We said it when fair value concerns exposed just how little of the premium was being returned to customers in claims. We said it when we discovered Discretionary Commission Arrangements within GAP sales. We said it when many cases reviewed showed GAP as being unsuitable for a customers needs. And we said it again when the evidence we uncovered showed that in a majority of cases chain commission is driven to extraordinary levels.

None of this came out of nowhere. We have been warning for some time that GAP has the same familiar ingredients seen in other consumer finance scandals.. poor value, weak disclosure, excessive remuneration and customers being sold a product they often did not properly understand, need or was suitable for.

That matters now more than ever.

The FCA’s motor finance redress scheme has finally drawn a proper line around what the scheme is actually about. It is a scheme about motor finance commission disclosure only. It is not a sweeping clean-up exercise for every ancillary product that happened to be financed alongside the vehicle.

For months, one of the most convenient positions in the market has been to blur that distinction. If GAP sat on the same agreement, the message has effectively been to wait, pause, let the motor finance position settle first.

That position was always flimsy. It is now untenable.

The redress scheme announcement does not bury GAP. It does the opposite. It confirms that GAP complaints were never part of that scheme in the first place, and that separate ancillary product complaints must be treated as separate complaints.

The line has now been drawn

A GAP mis-selling complaint does not magically become a motor finance commission complaint just because the cost was rolled into the borrowing.

That is the point the industry can no longer dodge.

Yes, a finance agreement may have funded the vehicle purchase in whole or in part. Yes, ancillary products may have been packaged into the same transaction. But that does not mean every complaint connected to that transaction disappears into the FCA’s motor finance redress framework.

GAP stands on its own legal and evidential footing. It should be investigated on its own facts. It should be answered as its own complaint. And it should not be hidden inside a completely different scheme just because that is more convenient for firms, ombudsmen or regulators.

Our findings and evidence has been before the FCA and FOS

We have not just been commenting from the sidelines.

We have made submissions to both the FCA and FOS setting out our findings and evidence in GAP sales. Those submissions have, so far, gone unanswered.

This silence mirrors the silence that followed concerns raised in 2016 regarding what was happening in the motor finance industry. Like that, this is not going to go away.

If anything, the continuing silence makes the position more uncomfortable for both the FCA and FOS, not less. The evidence is there. The questions have been asked. The concern has been raised. The only thing missing is a serious response.

FOS can no longer keep GAP in the long grass

The practical effect of the redress scheme announcement is that FOS can no longer comfortably keep GAP complaints on pause by sheltering behind motor finance.

That excuse has gone.

If GAP is outside the defined subject matter of the motor finance scheme, then it cannot keep being treated as though it is waiting for permission to exist. It cannot be left sitting in limbo while everyone pretends the main event is somewhere else.

That may have suited the industry. It may even have suited parts of the regulatory system. But it is a position that is no longer available.

Keeping GAP claims quiet is no longer a credible long-term strategy for the FCA, for FOS or for the firms who sold or financed the products.

The excuses are running out

Firms cannot credibly say “wait for motor finance” when the boundaries of the motor finance scheme have now been made clear.

FOS cannot indefinitely treat GAP as an awkward side issue to be pushed to the back of the queue.

And the regulator cannot continue to act as if GAP is just a historic pricing concern with no wider redress consequences, particularly when sales were paused, commissions were cut and growing evidence keeps pointing back to the same core problems.

The truth is that the market has had every chance to confront this early. Instead, it has too often chosen delay, silence and ambiguity.

The door is now open

This does not mean the FCA has created a dedicated GAP redress scheme. It has not… yet.

But it does mean the latest announcement has made one thing much harder to defend, delay.

The scheme has drawn a line. GAP sits on the other side of it. That means the complaints must move. The remuneration chains must be examined. The fair value issues must be confronted. The suitability concerns must be addressed. The complaint responses must be given. Redress must be paid. And the firms involved should have to explain themselves.

That is why we say the door is now firmly open.

Not because the issue is new. Not because the evidence has only just appeared. But because the ability to keep GAP tucked behind the motor finance curtain has disappeared.

The only real question now is how long the FCA, FOS and the industry think they can keep holding back the tide.

Because the wave is no longer theoretical.

It is on the horizon. And it is approaching quickly.