Under the rules, which came into effect on 14 January, firms selling extended warranties in the UK must have registered with the FSA in order to sell a raft of insurance products.
A spokesperson for Volkswagen admitted that while the group had not been granted FSA approval to sell or administer extended warranties, steps were in place to deal with potential problems.
He said the group was now working through warranty assistance organisation Mondial to offer motorists a deal on extending their original three-year warranty.
“The product we are offering through Mondial provides exactly the same cover as our own extended warranty,” he claimed.
“This is a proactive step on our part and is really just an interim solution while we look at getting the whole issue sorted out.”
A spokesman for the FSA said it could not comment on specific groups but that it had initiated an investigation unit charged with following up leads on dealers reputed not to have complied with the regulations.
“They're looking at car dealers around the UK to ensure they are complying with the new regulations governing the sale of motor insurance products,” he said.
“Under the new regulations, not registering amounts to a criminal offence and that could have serious implications for dealers.”
Tony Worthy, managing director of Compliancy Services, which advises dealers about meeting the rules, said it was in the best interests of VW to conform as quickly as possible.
“Selling an insurance related product from a retailer who is unauthorised will invalidate any insurance policy bought through them, impacting on customer expectations,” he explained.
Louise Wallis, head of business development for the RMI, said: “They (VW) should at least get a slap on the wrist for non-compliance and it could end up with them possibly not being allowed to offer insurance products as part of their business.
“This would certainly not do their profitability any good, but turning away people won't endear them to their customers.”