From January 5, 2005, companies selling insurance products such as GAP insurance, vehicle replacement insurance, early termination insurance, vehicle warranties and similar motor insurance products will need accreditation from the Financial Services Authority to be able to legally continue.
The deadline for registering passed last month but the newly-launched Association of Vehicle Finance Brokers (AVFB) claims it can offer its members the ability to continue to legally sell insurance products without applying for authorisation themselves.
Insurance specialist and AVFB board member Nick Mohan said: 'By joining the AVFB, vehicle finance brokers will have the opportunity to continue to sell these types of insurance products in a legally authorised way without having to go through the process of applying for authorisation themselves.
'This will allow them to have the potential of earning income out of the sale of general insurance products of this nature. Under the FSA regulations they will have introducer status and have an audit trail to show they are legally authorised.'
The AVFB is a division of the National Association of Commercial Finance Brokers (NACFB) and plans to introduce regulation to the market, via a code of practice for which approval is being sought from the Office of Fair Trading scheme, and a Kitemark scheme as recognition of approved standards.
Although the deadline has passed, companies may still have time to apply for accreditation from the FSA, Mohan said.
Everyone involved in insurance-based products is affected – retailers, repairers, carmakers and also fleet suppliers such as leasing companies. The FSA wants to raise standards of professionalism in a market that suffers from a poor image with consumers.
Retailers have three options – to become fully authorised to sell and advise on all insurance-based products, to become an 'appointed representative' for one or more providers to sell only the products they supply or to become an 'introducer' and have a passive display of leaflets promoting insurance-based products.