The Mortgage and Finance Association of Australia (MFAA) has lodged a follow-up submission to ASIC arguing flex-commissions should be abolished, in response to membership feedback.
“We wanted members to know that we have represented them and provided a follow-up submission on behalf of the industry,” an MFAA spokesperson has said.
“We wanted members to know that we have represented them and provided a follow-up submission on behalf of the industry.”
The new submission was lodged this week following the association’s February 2016 submission. It argues that banishing “point of sales exemptions” such as flex-commissions – whereby a party other than a lender can effectively set the interest rate payable by the consumer to reflect risk – will be a positive outcome for consumers.
“Our document has a clear focus on ensuring that brokers participating in all financing transactions should fully disclose any remuneration in any relevant transaction including those not regulated by the NCCP Act,” the MFAA spokesperson said.
“The MFAA used the opportunity to again remind regulators and the government that, in its view, the point of sale exemption should be abolished. This would create a level playing field and resolve many of the issues currently perplexing government and regulators, including flex-commissions.”
This view was supported in membership feedback, according to the MFAA, as a key focus for the industry is on positive outcomes for consumers.
ASIC has already cracked down on flex-commissions in the car finance market. In a discussion paper released to the motor finance industry by ASIC last year, the regulator said flex commissions create an “inherent risk of unfair conduct” with a “disproportional impact on vulnerable (but not credit impaired) consumers”.
The paper gave the industry until the end of January to respond and 18 months to make the transition should the government agree with the proposals. The review and discussion is still on-going.
The MFAA will make its follow-up submission regarding flex-commissions available to members when ASIC has acknowledged it publicly.