Astute Dealers will be rethinking their business model on how best to deal with receiving payments from finance companies when flex commissions are prohibited from 1 November 2018.
Notice was given by ASIC when, in September, it registered a Legislative Instrument stating it will, as from 1 November 2018, prohibit existing practices in the payment of flex commissions to Dealers.
The final Legislative Instrument is quite different from initial ASIC drafts in that it no longer seeks to ban all commissions on contracts written at more than 200bps below lenders’ nominated rates.
AADA CEO, David Blackhall, said it also preserves the Dealers’ rights to receive payments on discounted contracts, capping the amount payable at the 200bps level regardless of the actual discount beyond that.
He said it also preserves Dealers’ rights to receive from finance providers payments that are not directly linked to the effective rate paid by a consumer for a particular loan.
We anticipate the Legislative Instrument will be made law at the next Parliamentary sitting, he said.