What Is A Car Warranty?
Saturday, 16. July 2011
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Following from my previous article there has been much confusion for years about warranties provided on used cars. It has been a much held view that a car warranty is an insurance policy and therefore falls within the control of the Financial Services Act. In other words you have to be a regulated advisor to discuss the product and the product itself is regulated by the Act. If the warranty is a third party warranty it is generally accepted to be an insurance policy and therefore covered by the FSA rules.
However, a warranty provided by the manufacturer or dealer is normally considered to be a service agreement and I understand that some ‘warranties’ offered by third parties are also service agreements and therefore outside the FSA regulatory controls.
In the case reported by the Guardian they have suggested that the warranty issued to MW was a service agreement, I would be surprised if this was the case so MW should investigate further as he may have a claim via the FSA.
If you are taking out a warranty on a used car you should ensure you know what you are receiving, whether the warranty is a service agreement or an insurance policy and the exclusions. Have you had problems with warranty claims? Please let us know? By Graham Hill
