Finance and insurance are now a standard part of car dealership sales. If you’ve bought a car in recent years, you’ve almost certainly been offered them—whether through finance packages or add-on insurance products. Dealers earn extra income from these sales through commissions paid by lenders, brokers, and insurers, giving them a strong incentive to push F&I.
The Financial Conduct Authority (FCA) has tightened its rules in recent years. Dealers now have clear obligations when they sell F&I products.
What Should You Expect from Dealers?
Product Suitability
Dealers must sell products that match your needs. If they push finance or insurance without considering your circumstances, they may be breaching FCA conduct rules.
Asking the Right Questions
Expect plenty of questions about:
- How you plan to use the car
- Your budget
- Whether you want to own, lease, or keep your options open
- The level of protection you want if something goes wrong
The process should be customer-led, not salesperson-driven. The aim is to meet your needs and provide enough information for an informed choice.
Key Information You Should Receive
Product Features
Dealers must explain how finance and insurance products work. For finance, you should be told what happens at the end of the agreement—ownership transfers, fees, or return options. They must also explain your rights, including early settlement, withdrawal, or termination.
Worked Examples
Different finance products can lead to very different monthly payments. Unless you already know what you want, dealers should give worked examples so you can compare costs and decide what’s affordable.
Income and Expenditure
Be ready to share details of your income and outgoings if you apply for finance—especially if your credit score is low. Dealers and lenders use this to check affordability and prevent unsustainable debt. The FCA has tightened rules in this area.
Pre-Contract Information
You must be given an information sheet summarising your agreement or policy. Dealers are legally required to explain this clearly before you sign.
Timing
Dealers must present information in a clear order and in good time. You should have space to ask questions and time to think before making a decision.
GAP Insurance Rules
Since 2015, dealers must follow specific FCA rules for Guaranteed Asset Protection (GAP) insurance. They must give you prescribed information and wait at least two days before finalising the policy. This delay lets you compare options—many online policies are cheaper for the same cover.
Commission and Disclosure
Since January 2021, dealers and brokers must disclose whether they receive commission on finance agreements. The same applies to insurance.
- They don’t have to tell you the amount, unless you ask.
- If you do ask, they must disclose the figure.
- Disclosure must happen early in the sales journey, not at the last minute.
This rule improves transparency and reduces the risk of mis-selling, which was a major problem with products like Payment Protection Insurance (PPI).
The Bigger Picture
Whether you buy from a small independent dealer or a large franchise, the FCA expects high standards. Dealers must assess your needs, provide clear information, and let you make informed choices.
From July, the FCA’s new Consumer Duty will raise expectations even further. Dealers will need to show they deliver good outcomes for customers—not just sell products.
