Dealerships no longer have to outsource finance
to external parties or brokers

AADA Position

“The AADA believes that the current system provides consumers with convenient and affordable car finance. We understand and support the intent of the Financial Services Royal Commission recommendations but believe that extensive consultation is required to get the best outcome for both consumers and new car Dealers.

 

The current system subjects Dealers to significant oversight from finance companies and, by and large, delinquencies in the car finance market are low. Should a stringent licensing scheme be implemented, it will result in duplication of process and increased compliance costs, which will be passed onto consumers. Smaller, regional Dealers will be particularly hard hit.

 

Background

“The final report from the Financial Services Royal Commission included a recommendation (Recommendation 1.7) that called for the abolition of the existing Point-of-Sale (POS) exemption for retailers (including new car Dealers) that act as “vendor introducers” to finance companies. In the case of new car Dealers this is for the provision of car loans for their customers.

By abolishing POS, Dealers would be required to obtain a credit license or become an authorised credit representative. Both options would require duplication of process and increased compliance costs.

A survey of AADA members showed that very few have their own credit license or are appointed as credit representatives for their finance providers. This means that the vast majority of new car dealerships throughout the country would be affected.

A rapid and unconsidered abolition of the POS exemption would likely be an existential threat for many small, mainly regional, new car Dealers that currently depend on the exemption. This is because of the relative importance of the ‘finance and insurance’ profit centre to their ongoing viability. “

Source: https://www.aada.asn.au/our-policy/finance-insurance/point-of-sale-exemption/ – 8th July 2019

Protect your Dealership from the uncertainty of POS Regulation change

Become the Largest and Most Profitable Finance Broker in your Area

 

Terms and Conditions

1)    Commission payments are subject to change based on

Lender Monthly Rate fluctuations.

2)   INFYNITY Compliance and Software Fee: $165 + GST/month.

The Compliance Fee is inclusive of:

  • Credit Representative Registration – ASIC
  • Compliance Support
  • Compliance Auditing
  • Compliance Reporting
  • Compliance Training
  • Dispute resolution support

3)    Lender-claw backs are based on each Claw Back Policy and will be deducted from the monthly payment.

  • Commissions are reconciled at the END of each calendar

5)    Lender clawbacks are based on each lenders’ Clawback Policy and will be from the monthly payment.

  • Only distributed if commissions/fees have been received by AAA from the settled lender. (some Lenders don’t pay till the next month).
  • Only distributed if ALL compliance requirements per deal have been fully
  • All required supporting documents & correspondence uploaded into Loan
  • Less other outstanding AAA fees and any lender claw-back.

The AADA supports efforts to bolster responsible lending practices but believes that this can be done in a manner that does not duplicate process or drive up costs for consumers.”

COMPLIANCE FRAMEWORK

The Finsure approach to responsible lending and compliance

The Quality Assurance and Compliance Framework of AAA is supported by the Finsure Group’s approach to managing risk under the Three Lines of Defence (3LoD) Model. The Framework documents the businesses approach to monitoring compliance with Group protocols, policies and procedures, as well as the requirements of the National Consumer Credit Protection Act 2009 (NCCP).

The Framework is designed to:

Identify, evaluate and manage risk. Ensure consistency across the File Reviews conducted by the File Review Team (FRT). Create a forum to discuss known and emerging risks, Provide evidentiary records of performance through consistent and centralised reporting. Support the identification of training and development opportunities. Embed a continuous improvement culture within the aggregation space; and Meet the needs of our broker network and external partners

This process is designed to provide guidance on the planning and execution of Quality Assurance activities conducted within Aggregation, Financial Crime and Assurance Documents.

The Framework will monitor broker compliance with all relevant legal and regulatory requirements and rules of professional conduct, including:

  • Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML & CTF 2006)
  • Privacy Act 1988 (including provisions under National Privacy Principles)
  • The National Consumer Credit Protection Act 2009
  • ASIC Regulatory guide (RG) 205 Credit licensing: General conduct obligations
  • ASIC Regulatory guide (RG) 206 Credit licensing: Competence and training
  • ASIC Regulatory guide (RG) 209 Credit licensing: Responsible lending conduct
  • ASIC Regulatory guide (RG) 210 Compensation and insurance arrangements
  • ASIC Regulatory guide (RG) 165 Licensing: Internal and external dispute resolutions

The loan origination process is fully managed and monitored by AAA | Finsure which requires members to be ASIC registered Authorised Credit Representatives (ACR’s) under Finsure’s Australian Credit Licence (ACL) and to conform to all responsible lending requirements under our compliance regime. All accredited members are eligible to access AAA’s panel of accredited lenders and products.

Credit licensees must comply with the responsible lending conduct obligations in Chapter 3 of the National Consumer Credit Protection Act 2009 The key concept is that credit licensees must not enter into a credit contract with a consumer, suggest a credit contract to a consumer or assist a consumer to apply for a credit contract if the credit contract is unsuitable for the consumer. As a credit licensee, you must decide how you will meet the responsible lending obligations. RG209 sets out our expectations for compliance.

Meeting responsible lending obligations will require taking three steps: make reasonable inquiries about the consumer’s financial situation, and their requirements and objectives; take reasonable steps to verify the consumer’s financial situation; and make a preliminary assessment (if you are providing credit assistance) or final assessment (if you are the credit provider) about whether the credit contract is ‘not unsuitable’ for the consumer (based on the inquiries and information obtained in the first two steps).