A revised finance commission structure for dealers in the motor industry seems likely to take effect in late 2017 according to the Finance Brokers Association of Australia (FBAA).
The FBAA’s Peter White has met with the Australian Securities and Investments Commission (ASIC) to discuss the current review into motor dealer flex commissions after concerns that consumers are being charged excessively high interest rates due to steep loan commissions being added into borrowings.
“The FBAA and ASIC have been in continual contact on motor finance issues since the point of sale (POS) exemptions were first brought in from 2010, and we have held National Dealer Roadshows on this and other matters including the FBAA’s multiple submissions to ASIC on the controversial use of flex commissions.”
“Following on from our recommendations to the regulator, a likely outcome is car dealers and financiers may be able to discount the interest rate but must also reduce their commissions.”
Mr White said while any ASIC ruling will need to be passed by Parliament, flex commissions will likely remain in the interim. However by the end of 2017 the ability to increase interest rates by adding a higher commission structure will most likely be prohibited.
The FBAA has kept the industry up to date on these matters through the motor finance roadshows, and will continue to monitor the situation.
He also revealed that further investigations and reviews are being held into the related consumer credit insurance sector, with hopes high that fair and transparent commission structures for brokers will be one of the many positive outcomes.
“I also made mention of the FBAA’s long-held firm position on the removal of POS exemptions to motor dealers and although it appears that the Regulator may support such views this is not an ASIC matter and we will continue this ongoing conversation with Government.”
The industry veteran is hopeful ASIC will be supportive of its position as the FBAA strives to ensure an even and transparent market playing field for brokers, financiers and dealerships so that we achieve positive consumer outcomes.