Motor vehicles sold with extended warranty "an insurance product"

Posted :12-11-2004

New rules are to be applied to motor cars and motorcycles sold with extended warranties which will mean they are to be treated as insurance products.

That is the decision of the Financial Services Authority (FSA) and will mean that it can regulate the sale of such products as from the start of 2005, when the new definition comes into force.

Although new rules contained in the Insurance Mediation directive are generally intended to regulate how insurance is sold, the Telegraph has revealed that the British Government has interpreted it as covering car or motorcycle insurance products.

A Ford spokesman claimed the new rules would add "considerably extra cost" to the motor industry in the UK and many in the sector are annoyed that the UK has taken this approach when states including France and Germany have not given the directive such a wide interpretation.

However, the FSA has defended the wide scope, claiming that the directive will give customers a much better deal.

A spokesman for the FSA asked: "Why should a consumer not get the same protection at the dealership as they would get via an insurance broker?"
© DeHavilland Information Services plc

The views expressed within the article are entirely those of Adfero Ltd and are not those of BDML Connect Ltd