The AADA has been working with the Australian Finance Industry Association (AFIA) on the Government’s decision to abolish the Point-of-Sale exemption.
Federal Treasurer Josh Frydenberg has indicated that legislation will be prepared by 1 July 2020.
AADA/AFIA have commissioned research by Deloitte which demonstrates the importance of F&I income to dealerships, particularly during a period in which sales volumes are declining.
“Our members are doing it tough at the moment, and the AFIA study reflected this. It found that the overall profitability of automotive Dealers between 1 July 2018 and 30 April 2019 was 50 per cent less than a year previously” said Mr Voortman.
“35 per cent of customers use finance from a Dealer, and that income makes a significant contribution to the Dealers staying viable while providing their customers with a convenient competitive finance option. We are really concerned that removing the Point-of-Sale Exemption will have drastic consequences for the viability of many of our members, particularly the smaller, family owned operators in regional and rural Australia”.
AADA has sent Dealers a bulletin that provides members with an infographic and talking points enabling them to speak or write to their local MP.
Meanwhile, the Australian Retailers Association (ARA), have that if a proposal outlined in The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry Final Report – also known as the Hayne Report – goes ahead without proper consultation with the automotive and retail sales industry then it will be consumers who will be negatively impacted.
It says that transparent consultation from Treasury and ASIC before any measures are put in place, as well as a guarantee that existing Point-of-Sale Exemptions will be maintained, is the right move for Government and consumers.
If the recommendation to remove of Point-of-Sale exemption – is adopted, any costs incurred will likely flow on to consumers.
Recommendation 1.7 would essentially see retail vehicle Dealers acting as brokers for loan applications and, therefore, would be required to hold an Australian Credit Licence and comply with the National Consumer Credit Protection Act.
ARA Executive Director, Russell Zimmerman, said ARA was seeking a positive commitment from Government that it would not abolish the Point-of-Sale Exemption, introduced as an interim measure in 2009/10, as part of the National Consumer Credit Protection reforms.
“Why short-change the service currently offered at retail level? At the end of the day it is the finance company which is the licence holder of the entity responsible for any breaches against regulations,” Mr Zimmerman said.
“The implementation of this recommendation would result in a red-tape disaster for both retailers and government.”
Having welcomed the establishment of the commission, following revelations of misconduct within several Australian financial institutions, the ARA has now called for a thorough and practical approach to findings.