March 19, 2026

Daniel Lee

The Grotesque GAP Commission Award Has a New Leader

The Grotesque GAP Commission Award Has a New Leader: Step Forward, Motorpoint

We have a new winner for the grotesque GAP commission award.

Step forward, Motorpoint.

And what a performance it is.

This latest example shows a total gross underwriting premium of just £57 for the GAP product, yet the consumer was charged a staggering £429.00. Let that sink in for a moment. A product costing £57 at underwriting level somehow leaves the consumer paying £429. That is not a modest markup. It is not a tidy profit. It is not “just how the market works”.

It is an outrage, and yet again the FCA is asleep at the wheel.

And when the commission level comes out at a grotesque 86.7%, the question is no longer whether there is a problem with GAP insurance. The question is how anybody in authority was allowed this to carry on for so long.

GAP is not a new problem. It is not an emerging issue. It is not some quirky little side concern buried in the small print of the motor trade. It has been happening for years, in all likelihood to replace the lost revenue of PPI. Consumers have been sold wildly overpriced policies, often in circumstances where the paperwork is inadequate, the value is dubious, and the profit margins are eye-watering.

Now the numbers are becoming impossible to ignore.

£57 In. £429 Out.

Strip away the jargon and this is what you are left with…

A product with a gross underwriting premium of £57 ended up costing the consumer £429.

That means £372 was piled on top.

That is where the real story is, and the latest scandal on the conveyor belt.

The real story is in the staggering difference between cost and price, and that is where the ugliness lives.

When the overwhelming majority of the money paid by the consumer is not going toward underwriting risk, but toward commission and margin, this stops looking like insurance in any meaningful consumer-friendly sense. It starts looking like a profit-harvesting exercise attached to a vehicle sale.

GAP Is the New Scandal

Let us say plainly what the regulators still seem reluctant to confront.. GAP is the new scandal.

We’ve been building the evidence for years, while the FCA quickly brushed matters under the carpet. Complaint after complaint. File after file. Case after case. Inflated premiums. Nonsensical demands and needs processes. Consumers paying hundreds for products that appear to have been designed less for protection and more for extraction.

And still the response from the system has been painfully slow.

Where is the urgency from the FCA? It hasn’t event acknowledged receipt of our evidence of DCA’s in GAP.

Where is the knowledge and understanding within FOS? It seems to have lost all of its best people after PPI concluded.

How many more examples do they need before somebody stops pretending that this is all a matter of isolated bad practice? At what point do grotesque commission levels cease to be treated as unfortunate quirks and start being recognised for what they really are, a glaring sign that something has gone badly wrong in this market?

Because when a £57 product is sold for £429, nobody can seriously maintain that this was driven by consumer value.

It was driven by opportunity.

Opportunity to load the product.
Opportunity to exploit the sales environment.
Opportunity to profit from the fact that most consumers never get to see what sits underneath the price.

A Market Built on Consumer Ignorance

That is one of the most offensive parts of all this.

Consumers were never handed the full picture. They were shown the sales price, not the true economics. They were not told, in any meaningful way, that the actual underwriting cost could be a tiny fraction of what they were being asked to pay. They were not told that the product sitting in front of them may have been carrying commission at levels that would make even seasoned observers wince.

Why would they be?

Because the entire model depends on the consumer not knowing.

Conceal the facts, take the money and hope nobody finds out. This isn’t a pattern, this is a culture that has been facilitated by a weak regulator and weak leadership.

The less the customer understands, the easier it is to present these products as sensible, prudent, and worthwhile. But once the numbers are exposed, the illusion falls apart very quickly.

And that is exactly why this issue is becoming more dangerous for firms by the day.

The more these cases come to light, the more obvious it becomes that GAP was never merely an overlooked add-on. It was a highly lucrative stream of income hiding in plain sight.

Wake Up, FCA. Wake Up, FOS.

This is the point where the regulators need to decide what they are for.

Are they there to protect consumers, or are they nothing more than an industry damage control mechanism?

Because from where we are sitting, the message being sent to the market is hardly a deterrent. Firms have had years to make vast sums from these products, while the watchdogs appear to move at the pace of a sedated snail.

The FCA should have been all over this years ago.

The FOS should not need repeatedly educating on the basic ugliness of these figures.

And yet here we are, still uncovering commission levels so absurd that they would sound made up if they were not sitting there in black and white.

So let this latest example serve as a warning shot.

Wake up, FCA.
Wake up, FOS.
We’re knocking at your door, and we’re not taking no for an answer.

Because GAP is not going away.

Quite the opposite.

This is building.
This is spreading.
And this is about to blow up.

The firms involved may not like hearing it. The regulators may not like being reminded of it. But the numbers speak for themselves.

A £57 underwriting premium.
A £429 charge to the consumer.
A grotesque 86.7% commission level.

That is not a healthy market.

That is the anatomy of the next financial scandal.

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March 19, 2026

Daniel Lee

The FOS Reform That Rewards Cover-Ups

The latest Financial Ombudsman Service reform announcement is being sold as “certainty”. But let us be honest about whose certainty this really is.

For consumers, it is not certainty at all. It is a warning.

For firms, it is a useful roadmap.

Buried in the government’s March 2026 consultation response is one of the most dangerous ideas to emerge from the FOS reform package, an absolute 10-year backstop on complaints to the Financial Ombudsman Service, with only limited exceptions to be defined later by the FCA. It is being presented as balance. In reality, it rewards firms that can keep misconduct hidden for long enough.

That is the part they hope nobody says out loud, because once you strip away the language of “clarity”, “coherence” and “efficiency”, the message is brutally simple. If wrongdoing can be buried deeply enough, and for long enough, the ombudsman door shuts. After that, the consumer is left staring at the slower, costlier, riskier, and far less accessible legal route.

History shows that consumer protection is a secondary consideration with both FOS and the FCA, and this latest announcement is nothing more than a regulatory expiration date.

A Green Light for the Next Scandal

It is especially perverse when viewed against the real world. Financial misconduct is rarely identified at the start, especially when it comes to the FCA. It festers. It spreads. It is denied. It is dressed up as process, policy, training gaps, administrative oversight, or “industry practice”. The FCA, time and again, appears better at arriving after the fire than spotting the smoke.

So what happens when the watchdog is slow and the misconduct is well concealed?

Under this reform, the answer is obvious, the clock helps the firm.

That is the scandal within the reform.

A genuine consumer-focused system would ask when the consumer discovered the problem, and when they could reasonably have discovered it. This package instead asks how long ago the act happened. That is a very different question, and a very convenient one for institutions with deep archives, deeper pockets, and every incentive to keep a lid on things until redress becomes somebody else’s problem.

It also has the risk of contradicting legal precedent, which clearly states that in the event of deliberate concealment the clock does not start ticking until the salient facts are disclosed.

Then again, we’ve become used to the FCA facilitating unlawful conduct. See the PPI and Motor Commission scandals and prime examples.

The Regulator Marks Its Own Homework

Worse still, the 10-year backstop does not arrive alone. It comes as part of a broader shift to pull the FOS tighter into the FCA’s orbit.

The consultation response makes clear that where FCA rules are relevant, compliance with those rules will mean the FOS must find that the firm acted fairly and reasonably in relation to that element of the complaint. In plain English, if the rulebook is treated as the ceiling rather than the floor, firms will spend even more time arguing technical compliance while consumers are left trying to prove unfairness in a system increasingly designed to defer to the regulator’s own framework.

In simple terms, if the rules set by the FCA are subsequently considered to be unlawful… it’s “unlucky” for the customer and “well played” for the lender.

The government calls this “alignment”. To anybody who knows the system it is institutional self-protection.

The FOS was supposed to exist because life is messy, complaints are individual, and fairness is not always found in a compliance manual. Yet this reform package openly shifts emphasis toward FCA interpretation, FCA intent, FCA referrals and FCA-led guidance.

That should concern anybody paying attention.

No Appeal, More Control, Less Independence

The response also confirms there will be a formal mechanism requiring the FOS to seek a view from the FCA where there is ambiguity in FCA rules. The FCA will then have 30 days to respond. Even where one of the parties asks for a referral, it is the FOS that decides whether one is allowed. And if the FOS refuses, there is no appeal mechanism.

None.

Consumers are at the mercy of two organisations in the FCA and FOS, both of which have been subject to growing concerns from the highest levels. You only need to read what has been published by the All Party Parliamentary Group to realise that reform starts with the abolition of both the FCA and FOS.

So let us pause and appreciate the absurdity.

If the rules are unclear, the FOS asks the FCA.
If there is wider significance, the FOS asks the FCA.
If consumers want that question escalated, the FOS decides whether to allow it.
If the answer still goes against them, there is no appeal.

This is being marketed as streamlining. In reality, it looks uncomfortably like the consolidation of a complaints system around the same regulatory ecosystem that systemically fails to stop harm in the first place.

Mass Redress, Managed Outcomes

And then there is mass redress.

Firstly, mass redress wouldn’t be required if we had a competent regulator that implemented clear rules based in law, and provided a clear deterrent to any firm that considered acting outside of the rules.

We don’t have a competent regulator, and there has been no deterrent. Not one single fine for the motor finance scandal – NOT ONE.

Nevertheless, the response confirms that, in certain mass redress events, unresolved complaints at the FOS can be sent back to the firm to be considered under the terms of a redress scheme, with the FCA also empowered to pause complaints while it investigates and decides the regulatory response.

Again, this is described as orderly, efficient and consistent.

But from a consumer’s perspective, it is hard not to see the danger. The more systemic the misconduct, the more power the authorities want to centralise the outcome and channel people back through the machinery of the very institutions that caused the mess.

That is not justice. That is queue management.

Rewarding Delay, Punishing Discovery

This is why the 10-year backstop matters so much.

It does not exist in a vacuum. It sits within a package that narrows independent discretion, strengthens the FCA’s interpretive role, removes any formal appeal route, and in mass events allows complaints to be redirected back to firms under a managed scheme.

Piece by piece, the supposedly independent ombudsman model look less like a consumer safeguard and more like a managed pressure valve for the financial system.

The official line is that these reforms will “return the FOS to its original role”. That phrase should concern everybody. Because what is being described as a return to first principles increasingly resembles a return to deference… deference to the regulator, deference to the rulebook, deference to process, and deference to institutional convenience.

The public should not be fooled by the language of reform. A 10-year backstop does not deter misconduct. It encourages the next scandal.

It tells firms that if they can keep consumers in the dark for long enough, the ombudsman becomes unavailable.

It tells victims of long-running mis-selling that timing matters more than truth.

And it tells the market that the lesson from previous scandals has not been “find harm earlier and put it right”, but “draw the line sooner and close the book faster”.

This Is Not Reform

This is not reform. It is retreat.

And it is the kind of retreat that all but invites the next mis-selling scandal.

Because when the watchdog is late, the system is slow, and the cover-up clock is ticking, the 10-year backstop does not protect consumers from stale complaints.

It protects firms from fresh embarrassment.

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March 17, 2026

Daniel Lee

When Proof Is Not Enough for FOS

There are two phrases the Financial Ombudsman Service (FOS) seems to adore… “on the balance of probability”, and “more likely than not”.

In theory, that sounds reasonable enough. In practice, it has become a convenient hiding place. A slogan. A shield. A way of dodging hard evidence in favour of whatever tortured explanation best protects the financial firm on the other side of the complaint.

And that is exactly what we have seen again in our latest response.

The finance agreement is dated 10th January 2018;
The dealership invoice is dated 10th January 2018;
The disbursement form is dated 10th January 2018;
The demands & needs statement is dated 15th January 2018;

In this case, the evidence is not vague. It is not incomplete. It is not evenly balanced. It is not a matter of guesswork, probability or speculation. It is proven and documented.

We have shown that the GAP insurance was invoiced and paid for five days before the Demands and Needs statement was even completed, and that the two-day cooling-off period was not adhered to.

This conclusion is reached by simply reviewing the documentation provided by the dealership itself.

That should be the end of it, but this is FOS.

It is not a close call. It is not a nuanced debate. It is not one of those cases where FOS can shrug its shoulders and reach for its favourite phrase. The paperwork proves what happened. The timeline is there in black and white.

And yet, in the face of that evidence, FOS has had the audacity to suggest that the dates on the paperwork may have been an administrative error.

Of course they may have. Anything may have happened if imagination is allowed to outrank evidence.

To add to this, FOS has stated that there is no evidence that the motor finance agreement had commenced, again contrary to the actual motor finance agreement and statement of account.

Maybe the paperwork wrote itself. Maybe the clock was wrong. Maybe the dates aligned by cosmic accident. Maybe reality itself simply became inconvenient.

This is the absurdity of what consumers and their representatives are up against. When the evidence supports the lender or dealership, it is treated as solid. When the evidence exposes the sale, suddenly we are invited into a fantasy world where documents become unreliable, timelines become flexible and obvious failings become “possible admin errors”.

It is beyond parody.

When Proof Exists, Why Is FOS Still Guessing?

FOS loves to speak about deciding cases on the balance of probabilities, but what happens when the probabilities are no longer relevant because the facts are already proven? What happens when the documentary evidence is so clear that the only way to avoid the obvious conclusion is to invent an alternative explanation for the business being complained about?

Apparently, what happens is that FOS bends over backwards to find another reason based upon fantasy.

That is why we say, repeatedly and without apology, that we are required to educate FOS on an almost daily basis. Not because the issues are especially complicated. Not because the rules are impossible to follow. But because even straightforward evidence is too often met with resistance, excuse-making and institutional reluctance to hold lenders and brokers properly to account.

This is not impartial scrutiny. It is not robust adjudication. It is certainly not consumer protection.

It is damage control, and it is institutional collusion.

The Pattern Is Impossible to Ignore

No matter how clear the evidence, there seems to be a route by which the firm can attempt to be rescued. A missing document becomes unimportant. A contradiction becomes harmless. A clear breach becomes an “administrative error”. A proven failure becomes something FOS can wave away with a speculative alternative that just so happens to favour the financial business.

Consumers are entitled to ask a very simple question, if proof is not enough, what exactly is?

Because if an invoice and payment date showing GAP was put through before the Demands and Needs statement was completed does not prove the process was broken, then the process is not merely flawed. It is rigged in favour of the industry.

You might as well hire the largest shredder you can find, and get rid of all of your documentation.

And yes, we are now calling it what it increasingly looks like.

When an organisation charged with deciding complaints fairly stretches itself to explain away clear evidence whenever that evidence is inconvenient to lenders and dealerships, people will naturally begin to ask whether this is mere incompetence, or something worse. Whether it is bias, capture, or collusion by culture rather than confession, the end result is the same… the consumer loses, the lender / dealership is protected, and common sense is shown the door.

That is why this complaint has now been escalated to an Ombudsman, trusting once again that one of the very few people remaining within the service with a modicum of common sense will reach a fair conclusion.

It should never have been necessary. But here we are again, climbing another rung of the ladder because the first response could not bring itself to accept what the evidence plainly showed.

The Wall Around the FCA and FOS Is Starting to Crack

This is also why the latest criticism from Parliament matters. The All-Party Parliamentary Group report into the FCA adds to a growing sense that confidence in the regulatory and redress system is collapsing. More and more people can see what consumers and representatives have been saying for years, that these bodies do not look like fearless protectors of the public. Too often, they look like protectors of the banking sector first, and reluctant servants of justice a distant second.

The façade is weakening.

For years, the FCA and FOS have benefited from institutional deference. They were treated as referees. Neutral adults in the room. Bodies whose conclusions should be respected because they were presumed to be independent, balanced and expert.

But that deference is collapsing under the weight of lived experience.

When evidence is ignored, when obvious failings are excused, when consumers are forced to fight every inch of the way, and when even clear documentary proof is met with “maybe it was an admin error”, respect turns into suspicion.

And suspicion turns into something even more dangerous for these institutions.

Recognition that the system is not malfunctioning by accident. Recognition that it is operating exactly as entrenched, self-protective systems tend to operate. Recognition that when push comes to shove, the benefit of the doubt too often flows in one direction only.

Call It What It Is

So let us be absolutely clear.

If GAP was invoiced and paid for five days before the Demands and Needs was completed, that is not a paperwork quirk. It is not a harmless inconsistency. It is not an administrative mystery. It is evidence of a process that was fundamentally wrong.

And if FOS cannot say so plainly, then FOS is part of the problem.

But the bigger point remains, a redress system that has to be dragged back toward reality every single day is not fit for purpose. And the more these cases pile up, the harder it becomes for the FCA and FOS to maintain the fiction that they are acting as independent guardians of fairness rather than institutional defenders of the firms they are supposed to police.

The wall is trembling.

And when it finally comes down, it will expose both organisations for what far too many consumers already believe them to be, protectors of banks, not champions of justice.

We will call it out, and we will defeat injustice.

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March 13, 2026

Daniel Lee

When “No” Apparently Means “Sell It Anyway”

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.

...

March 11, 2026

Daniel Lee

Dirty Business Dirty Regulation

Dirty Business, Dirty Regulation: Is There Any Real Difference Between the Environment Agency and the FCA?

Watching Dirty Business is enough to make your blood boil. Not just because of what it says about the water industry, but because of what it appears to expose about the regulator that was supposed to keep it in check.

And the more you watch it, the harder it becomes to ignore the obvious question… are we really looking at an environmental scandal alone, or are we looking at the same regulatory disease that has infected financial services for years?

Because once you strip away the sewage pipes and replace them with finance agreements, the parallels with the FCA and, by extension, the FOS, are not just striking. They are damning.

The Environment Agency has long been criticised for relying on operator self-monitoring. In plain English, that means regulated firms are trusted to report on their own compliance, their own breaches and, too often, the scale of their own wrongdoing.

Sound familiar?

Because that is exactly the smell coming off the FCA’s handling of the motor finance commission scandal. The watchdog banned discretionary commission in 2021, but only after the market had already been allowed to fester. Since then, the public face of the response has been review, pause, consultation, more pause, and now a watered down compensation scheme, all after the scandal was already in full flow.

That is not proactive regulation. That is turning up after the building has burned down and asking whether a consultation should be launched into the temperature of the flames.

But Dirty Business goes further than mere regulatory laziness or weakness. One of the most chilling suggestions in the series is that criminality had effectively been built into the water companies’ business models. Not as a one-off lapse. Not as the work of a few bad apples. But as a commercial strategy where breaking the rules, cutting corners and risking unlawful conduct was simply part of the profit calculation.

And that is where the comparison with banking becomes deeply uncomfortable.

Because it is becoming increasingly difficult to argue that parts of the banking sector have not adopted much the same approach. When unlawful or unfair conduct becomes widespread, persistent and highly profitable, it stops looking accidental. When firms design sales models, commission structures and complaint handling processes in ways that maximise revenue first and worry about legality later, that is not a compliance failure. That is a business model.

And in motor finance, that is exactly what this scandal risks exposing.

Discretionary commission was not some obscure technical glitch. It was a system that allowed brokers and dealers to increase the interest rate paid by consumers in order to increase commission. It created a direct financial incentive to overcharge. That is not a minor oversight. That is the industrialisation of consumer harm.

And even now, the response tells its own story. There have been no headline-grabbing personal consequences for senior executives. No sense that those at the top who presided over unlawful conduct are being pursued with anything like the seriousness the scandal deserves. Instead, the debate has largely centred on the cost of redress, the impact on firms, and how to manage the fallout.

In other words, exactly the sort of response you would expect where wrongdoing is not treated as an aberration, but as something the system is quietly built to absorb.

Then there is the money.

The FCA is funded by the firms it regulates. The FOS is funded by the industry too. And while the Environment Agency is structured differently, it is likewise not immune from the distortions that come from being financially entangled with the sectors it oversees.

Now, that does not automatically prove corruption. But it does create the kind of dependency that breeds timidity, caution and institutional self-preservation. It creates regulators that talk tough in public while acting delicately in practice. Regulators that become obsessed with “stability”, “proportionality” and “market confidence” just as ordinary people are discovering they have been ripped off, poisoned, ignored or fobbed off.

And what happens when somebody points this out?

In Dirty Business, the whistleblower is not portrayed as being welcomed with gratitude and urgency. Quite the opposite. The picture painted is of an organisation more interested in containing the problem than confronting it. That, again, feels painfully familiar. In financial services, the establishment line is rarely, “Consumers need expert help against powerful firms.” It is usually, “Do they really need representation?” The push is always toward keeping people inside a system that the institutions already understand, already dominate, and already know how to game.

That is one of the grimmest similarities of all. Both systems start to look less like avenues of accountability and more like closed loops of managed dissent. Whistleblowers are inconvenient. Professional representatives are inconvenient. Independent scrutiny is inconvenient. What is always preferred is a quieter victim, a cheaper complaint, a softer challenge.

Then there is the revolving door problem, the broader and deeply corrosive culture in which regulators and regulated sectors become part of the same professional ecosystem. The result is not always overt misconduct. Often it is worse… shared assumptions, shared language, shared instincts and shared loyalties. Eventually, the regulator stops seeing itself as a public shield and starts behaving like an industry risk manager.

That is when enforcement dies.

Look at the contrast between the scale of the motor finance scandal and the visible response. The public has seen consultations, pauses and reduced compensation proposals. What it has not seen is a ferocious display of executive accountability that matches the seriousness of the wrongdoing.

And that is the heart of it.

When unlawful conduct on an industrial scale leads not to personal accountability at the top, but to carefully managed remediation architecture, the message is unmistakable. If you are big enough, important enough, or politically awkward enough to challenge, the state will manage your scandal rather than punish it.

That is how public trust collapses.

The Environment Agency was supposed to protect the environment, yet Dirty Business leaves viewers asking whether it became too close, too passive and too compromised to do the job properly. The FCA was supposed to protect consumers and market integrity, yet in motor finance it has looked slow, cautious and acutely aware of the consequences for firms. The FOS, meanwhile, increasingly risks looking less like an independent route to justice and more like an overstretched appendage in a system trying to keep a lid on the fallout.

So is there any real difference between the Environment Agency and the FCA or FOS?

Yes, on paper.

In practice, the similarities are becoming impossible to ignore.

All three sit uncomfortably close to the industries they oversee. All three appear vulnerable to the logic of self-reporting, self-regulation and institutional caution. All three give the impression that scandal must become impossible to deny before meaningful action begins. And all three leave the public asking the same bleak question: are these watchdogs, or are they just damage-limitation departments with logos?

Because that is what this really comes down to.

A regulator that waits for catastrophe is not regulating.
A regulator that leans on firms to explain their own misconduct is not regulating.
A regulator that treats whistleblowers and professional challengers as the problem is not regulating.
A regulator that shrugs while criminality or unlawfulness is baked into a business model is not regulating.
And a regulator that protects the system from the consequences of wrongdoing more energetically than it protects the public from the wrongdoing itself has ceased to be a watchdog at all.

It has become part of the business model.

...

March 19, 2026

Daniel Lee

We Financed It By Mistake – The Latest GAP Complaint Excuse

“We Financed It By Mistake” — The Latest GAP Complaint Excuse, And Why It’s Not Going To Fly

There’s a new contender in the GAP complaints Hall of Fame, and it’s a beauty.

Step forward Volkswagen Financial Services (trading as Skoda Financial Services), with a response which is essentially this:
“Yes, the GAP policy ended up on the finance agreement… but that was an error. Here’s the interest we earned back. And as for everything else, complain to the dealership.”

If you’re wondering whether that’s a genuine misunderstanding of responsibility, or a tactical attempt to exhaust consumers into giving up… join the queue.

The “clerical error” that somehow became a credit agreement

In its response to our complaint the lender acknowledges the GAP policy was financed, calls that financing “in error”, and offers a refund of the interest on the financed amount.

Then comes the getaway car: “We don’t sell/arrange/underwrite GAP, so we can’t investigate how it was sold, that’s for the dealer.”

But you do finance it, and benefit from doing so.

This isn’t just weak. It’s internally contradictory, and it isn’t a one off… it’s becoming a regular excuse.

Because once you’ve financed a product inside a regulated credit agreement, you are part of the transaction.

That’s the whole point of being the lender.

The lender tries to sound noble: “I have no intention of ‘passing the buck’…” …right before attempting to direct the complaint to the dealership as the party who will “address” the concerns.

“We financed it in error” is not a defence, it’s a confession

Let’s translate “we financed it in error” into plain English:

Your controls are so poor you didn’t know what you were lending for, or
You knew exactly what you were lending for, but you’d now like that to become “an error”, because it’s inconvenient.

Neither is a good look, and neither can be relied upon.

If a lender is paying a dealership based on an invoice, then the idea that optional extras and add-ons can just drift into the funded amount like a plastic bag in the wind raises obvious questions about record-keeping and governance.

So when we say this smells like either poor competence or tactical denial, we’re not being dramatic. We’re reading what’s in front of us.

It does appear that the lender has considered which is the worst option, and has concluded that having no controls over what it finances is better than being responsible for the sale of the GAP product.

An interesting choice to make.

Financing the GAP policy drags the whole mess into consumer credit territory

If the GAP cost is on the credit agreement / financed as part of the loan, the lender is contractually linked to it, and that matters because the Consumer Credit Act gives the court power to intervene where the relationship arising out of the agreement (or a related agreement) is unfair.

Section 140A is designed to let the court look at the whole relationship (terms, conduct, disclosures, commission, and what was (or wasn’t) done before the agreement was made).

Also worth remembering: section 56 of the Consumer Credit Act defines “antecedent negotiations” and treats pre-agreement negotiations by brokers/suppliers as part of the credit transaction framework.

So the idea that a lender can wash its hands because “the dealership said the words” is, at best, very optimistic.

The “refund the interest” trick: small cheque, big distraction

The lender’s move here is textbook:

Admit a narrow point (“we financed it in error”).
Pay a tiny sum (“here’s the interest”).
Deny the real complaint (“we can’t investigate sale / suitability / fair value / chain commission disclosure”).
Pray that the complaint will go away.

But the consumer’s resolution request wasn’t “please return the lender’s profit on the financed amount”. The issues raised include (among other things) suitability, evidence of understanding and acceptance, fair value, and chain commission transparency.

Refunding the interest attributed to the GAP product doesn’t answer any of that. It’s like setting fire to someone’s kitchen and then offering to replace the tea towel.

This is either ignorance, or strategy, and neither is acceptable

At this point, lenders have had more than enough time to learn a very simple concept:

If your name is on the credit agreement, and you financed the add-on, you don’t get to play “mere spectator”.

Some firms appear to be hoping that:

consumers won’t understand the difference between sale responsibility and credit responsibility,
they’ll be too busy to push back,
and they’ll accept the “go complain to the dealer” diversion as the end of the road.

Forwarding a complaint isn’t a magic wand.

If the lender has responsibility by way of financing a product, it must investigate and respond properly. It cannot outsource that duty to a dealership as a convenient escape route.

And if a lender is effectively admitting it didn’t properly check what it financed, that’s not “remediation”. That’s a red flag.

They won’t make these claims go away. They’ll just keep trying different excuses. And we’ll keep calling them out.

Poor complaint handling and the FCA asleep at the wheel

Lenders have a long proven history of failing to handle complaints in accordance with their regulatory obligations, but it is examples such as this which results in consumers becoming reliant upon professional representatives.

The Financial Conduct Authority (FCA) is regularly found asleep at the wheel, and it is no surprise that it is currently playing catch up (again), with respect to products such as GAP.

It is almost always professional representatives that shine a light on scandals, much to the embarrassment of the FCA.

And the FCA doesn’t appear to take kindly to being embarrassed (although it should be used to it), so it targets representation rather than the firms that cause the scandal in the first instance.

GAP mis-selling is becoming the latest scandal, whether the FCA like it or not.

...

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The “refund the interest” trick: small cheque, big distraction

This is either ignorance, or strategy, and neither is acceptable

Poor complaint handling and the FCA asleep at the wheel

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