In March 2017, ASIC announced that it would restrict flex commission arrangements in the car finance market by imposing a cap of 2% on flex commissions. Unintentionally, the draft prohibition would have applied to all credit contracts and consumer leases regulated by the National Consumer Credit Protection Act (NCCP), and may impact lenders involved in mortgage management, servicing, non-bank lending or securitisation even though they are not involved in motor vehicle financing.
Following considerable feedback received on the draft legislative instrument, ASIC now proposes to distinguish between point of sale exempt dealers and licensed brokers, at least when it comes to the introducer fees they charge consumers.
ASIC notes that:
- in light of strong feedback on the 'credit fees and charges' element of the draft legislative instrument, ASIC is proposing that credit providers set the maximum amount a point of sale exempt dealer can charge a consumer for its credit introduction services, which a dealer is open to negotiate downwards; and
- no maximum or other limitation is to be required for a licensed broker charging a client for its services because NCCP fee quote disclosure obligations will apply.