Due to overregulation by the government, car dealers are being put off selling car finance and car insurance, according to a recent study by the National Franchised Dealers Association.

The NFDA have warned that controversial regulation measures introduced to the vehicle industry by the Financial Services Authority (FSA) in 2005 may have had an adverse effect on dealers selling insurance and finance . The regulations, intended to govern insurance related policies, may have cleaned up the industry however.

The NFDA found that the number of car dealers who have full FSA authorisation has slid from 76 per at the turn of the century to just 54 per cent.

Car dealers are shunning insurance sales because of government over-regulation. Louise Wallis, the NFDA head of business development, reportedly commented: The complexity and cost involved in being authorised is clearly putting many dealers off. Many in the motor trade believe that they should never have been included in the regulations in the first place.