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ASIC bans flex commissions

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Australian Broker | 03 Mar 2017, 02:52 PM Agree 0
The regulator has announced it will prohibit flex commissions in the car finance market
  • (0)(0) | 03 Mar 2017, 03:00 PM Agree 0
  • Not Surprised | 03 Mar 2017, 03:29 PM Agree 0
    Idiots, so what I am reading here is the savvy consumer whom shops around and goes to their broker and gets better rates service and product will not have the ability to negotiate terms and instead will have fixed rates that will undoubtedly be higher then they otherwise would have had so again the savvy find them selves paying the for the unsavvy slack consumer who can not be bothered shopping around!

    Also how is it a better outcome for the consumer wanting a 10k car loan when brokers say nah, I can't help you not worth it... again those needing the help are the ones who ultimately will not get it.

    ASIC must work for Labor because only a labor supporter would think increased regulation results in better outcomes for consumers, no one in today.s world with internet access etc can claim to not know it is worth shopping around. Those that do not shop around and take what ever a car yard gives them is one thing.... SLACK and the rest of the world will be paying for that slackness.
  • there goes the broker proposition | 03 Mar 2017, 03:40 PM Agree 0
    The Average commission I charge is 2% leading to about $600 on the average car loan - The reason I do well with car loans is I beat the pants off the rates the car yards give or their own bank gives. I tell the clients what I make and they sign.

    It makes me sick to think my competitive advantage will disappear, now what incentive will a person have to shop around? How will I find my clients, in all seriousness why would a person come see us when they know the rate by law will be the same or similar in the car yard and they can just do it there and then... so there goes competition in the industry.

    FInally the work on a brand new car is simple and deserves less commission, but a private sale I have to go inspect vehicles sometimes a hour away from where I live... it will be simple now I simply will not do private sales, which consumers will that benefit? They will have to simply take what ever their bank offers, what their bank offers is usually a personal loan at 16%, where they may have got 8-11% on a 7 year term with me they will now get a 5 year term at 16% at their bank.

    I think ASIC deserves another pat on the back for looking after the big banks (yes pretty sure the big boys put in their thoughts for sure)
    • Disgusting | 03 Mar 2017, 03:48 PM Agree 0
      More then just thoughts I think ($$$$$). More corrupt then the government!
  • Disgruntled | 03 Mar 2017, 03:47 PM Agree 0
    Way to absolutely F**K every BM at every dealership across the country!
    Watch the amount of brokers who step back into the Mortgage industry, only for them to get F**KED by ASIC too!
  • Matt | 03 Mar 2017, 03:50 PM Agree 0
    Pretty sure this decision will just increase the application fee charged by dealers and brokers alike.
  • P Keating | 03 Mar 2017, 03:50 PM Agree 0
    Firstly, it was a Labor Government that deregulated the financial services industry in the first place. Secondly, ASIC work for no one political party as you well know. But last time I checked we had a Liberal Government in Canberra. I suggest you take your concerns up with Kelly O'Dwyer ( Minister for Financial Services ). She may be busy though as she is also behind the ASIC mortgage broker remuneration enquiry.
    • Get over it son | 03 Mar 2017, 04:14 PM Agree 0
      Pretty sure the labor thing was tongue in cheek P. Keeting but the remuneration review was from memory slated under the rudd - gillard- rudd government. The people running ASIC officially have no leanings towards any political activity but we all know that left leaning people are attracted to positions within government that is why for instance when Kaiser Trad said on TV a couple weeks back that hitting your wife was ok the ABC never reported on it. The ABC officially has no bias but are as green as Labor's cousins the watermelons.

      But again it was tongue in cheek wasn't looking to start a political debate
  • Damo of Adelaide | 03 Mar 2017, 03:58 PM Agree 0
    Personally I think Fantastic News and not unexpected.

    I have mainly specialised in Leasing and Car Finance for 15 years and seen the damage that Flex can do.

    Dealerships making $3,000 commissions on a $12,000 vehicle because they stitched up the client on 15% ( ).

    Every lender I deal with is always Base Rate ( Brokerage Fee) and I quote the effective rate to the client.

    Hopefully this will kill off F & I for good.
    • Good Point | 03 Mar 2017, 04:17 PM Agree 0
      I guess that is the other way to look at it.

      But will that make car prices go up? I have to admit I always encourage my clients to let the yard think they will get the finance so they are tempted to win the business on car price and then once the car prices are locked in they come see me.
    • JOBLESS2 | 04 Mar 2017, 09:22 AM Agree 0
      Yes, however you do realise your going to be out of work now. if everyone charged the same why would a client walk out of the dealership to go to you?
  • Denarius | 03 Mar 2017, 04:19 PM Agree 0
    Well, this will be interesting - wonder how it will impact the propensity of some intermediaries to 'game' the base rate lower by massaging assumptions on the credit application. Given there's less scope for easy scalp on the downstream rate, they'll probably need to work harder on upstream...

  • If you are gonna clean up the yards do it properly | 03 Mar 2017, 04:19 PM Agree 0
    LOL I wonder if they plan to Ban the pointless pieces of paper that car yards sell like Gap Insurance, Paint Protection and Tyre and Rim those probably cost consumers much more then the higher interest rates.
    • | 03 Mar 2017, 05:28 PM Agree 0
      Gap insurance should not be banned on commercial loans. There is always a shortfall if anything happens to a vehicle financed under commercial plans as there is always a percentage of the charges to be paid.
      Consumer lends I totally agree with knocking it out but not commercial as it is against the best interest of the clients.
  • Jobless | 03 Mar 2017, 04:44 PM Agree 0
    Why not fix the prices of cars while we're at it....the savvy buyer generally gets it 2-3k lower than the other.
  • Broker | 03 Mar 2017, 05:06 PM Agree 0
    Morons - I don't deal with car finance , but I am sure that those who do will ensure they are remunerated similar to what they otherwise would have been.

    Banning things does not mean they go away, it usually just pushes up the price!
  • Educated and caring broker penalised by morons. | 03 Mar 2017, 05:12 PM Agree 0
    WOW JUST WOW!!!!
    As always ASIC step in and presume they know what they are doing. So now if I need to do a private sale for one of my rural clients where I have to go and inspect the vehicle, liaise with the seller to ensure that all liens etc are paid and finalised to ensure clear title to the vehicle and to ensure that the correct person gets paid I need to do it for very little return. No doubt the big 4 will be happy to do the personal loan at 16-17% as long as there are no defaults or a late paid debit card with their institution! Does ASIC know that the big 4 will knock a client back on a personal loan if they overdrew their debit card with them in the last 10 years? Bet they don't , bet they also don't know that the car loan is usually a bucket load cheaper than a personal loan and a hell of a lot more flexible.. So sick of being painted as the bad guy when the majority of people in bank branches have zero to little understanding of the entire financial industry and have none or little understanding of any other products bar their own small scope of products... OMG I can't talk anymore I feel that I am going to explode.. well done for destroying another area of the financial arena while still keeping cosy with the banks.. they must be in training to be politicians. Small idea and limited vision of the real world!
  • Claude | 03 Mar 2017, 05:27 PM Agree 0
    The Car Yard will still need to make the same revenue.... If they cant make it on Finance, then they will make it on the price of the car. In reality I dont think this will benefit consumers, only those too lazy (or dumb) to shop around. Classic example of ASIC introducing more red tape to the detriment of an Industry....
  • | 03 Mar 2017, 09:42 PM Agree 0
    A few lenders have seen this coming for some time and have already changed their pricing model. Eg, 1 lender approves all deals at max rate then you discount from there. Just like the inquire to insurance commissions nothing will really change. This will not help the consumer one bit.
  • Wayne Armstrong | 04 Mar 2017, 10:10 AM Agree 0
    What so they should let the motor
    Industry keep ripping every customer off so you can finance a coupe of second hand shot heaps

    What should you do STEP UP MATE
    you in the bottom end of the market
  • Wayne Armstrong | 04 Mar 2017, 10:12 AM Agree 0
    You make more money than the guys that do all the work the car sales men
    You think your good your just sticking it up the consumer

    Get into the real word looser
  • Wayne Armstrong | 04 Mar 2017, 10:15 AM Agree 0
    F&I is just a joke they should where hoods
  • Effective Interest Rate | 04 Mar 2017, 12:35 PM Agree 0
    Would an "Effective Interest Rate" be the simplest solution?
    To deal with the flex commission issue, perhaps all that was needed was to legislate the mandatory declaration to the consumer the "Effective Interest Rate" which embraces ALL the costs of the car finance contract. This would provide to the consumer a true finance interest rate which is the simplest way to compare finance from other finance sources which is shown as an interest rate.
    It appears now you will have some form of "legislated interest rate" other fees which may not readily allow the consumer, without employing an actuary, to know what is the true cost of car finance expressed in a percentage rate.
    So how can consumers compare other finance sources?
    Speaking of other finance sources, what are Credit Card rates?
    Google the Australian Debt Clock and when you pick yourself off the floor, you will see Credit Cards right now at $48 billion!
  • Novated! | 04 Mar 2017, 09:13 PM Agree 0
    Lets hope this includes novated leases. Mirrors and Strings about tax advantages hide the cost of the interest rate on car finance.

    Full disclosure, what is the interest rate you are charging on the car finance? Can my broker provide the finance part?

  • Ha ha | 06 Mar 2017, 11:18 AM Agree 0
    So now they will have a headline rate and the discount will negotiated just like home loans.
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