2direct to launch a product to help car dealers prepare for regulation
2direct Ltd is to launch a professional indemnity scheme for car dealerships selling insurance products.
The policy is backed by a Lloyd's syndicate and will cover motor dealers for both mis-selling on the shop floor and through marketing put out at head office level.
2direct is thought to be in advanced discussions with at least one major motor manufacturer about rolling out the product.
2direct managing director Phil Hayes said: "We are trying to help motor dealerships prepare for FSA regulation next January by putting in place all the necessary components as early as possible.
"The cover will allow compliant motor dealers to continue selling motor insurance to all their customers."
Though most big car dealers are expected to apply to become directly authorised Insurance Times has learned that one of the UK's biggest groups, Dixon, is to use its links to Royal Bank of Scotland to become its appointed representative.
Other dealers such as Reg Vardy are expected to get at least some of their dealerships directly authorised with the FSA, with smaller outlets acting as appointed representatives of the head office.
Sales of financial products such as motor insurance can account for up to 50% of a motor dealership's profit margin. And by not offering insurance, dealerships are thought to significantly jeopardise their sales.
ASA Insurance is rolling out a number of schemes to help car dealerships through the FSA minefield. These include a temporary scheme to be sold through dealerships that will allow cars to be driven away.
ASA is also establishing a presence in some of the big car supermarkets such as Car Shop, Car Land and Car Craft.
