Point of Sale Exemption
When the Banking Royal Commission was announced back in late 2017, very few people thought it would have significant implications for franchised new car Dealers. After all, it was misconduct primarily by the big four banks which caused public outrage. Yet in February when the Royal Commission recommendations and the Government’s acceptance of these were revealed there was a policy reform included which could have significant implications for Dealers.
The reform in question is the recommendation to abolish the Point of Sale exemption – which allows car Dealers and other retailers in a range of industries to facilitate finance for their customers without the need to hold a credit licence.
The AADA has been clear from the day the proposed abolition was announced – bringing Dealers within a licencing regime is unnecessary and will result in additional regulation which will add to the cost of doing business and restrict our ability to assist customers.
These arguments have fallen on deaf ears as the Government is highly reluctant to be seen to be walking away from what the Royal Commission recommended. In accepting this recommendation, the Government committed to “carefully consider how these reforms are implemented to ensure balance is achieved between consumer protection and access to products and services”. Disappointingly, there has been no formal consultation to date and the Government has committed to introducing legislation by 1 July 2020.
Nevertheless, the AADA has persisted in trying to influence the implementation of this proposed policy. To this end the AADA has engaged in the following activity:
- partnered with the Australian Finance Industry Association and have conducted research which shows the importance of F&I to a new car dealership;
- working with the Australian Chamber of Commerce and Industry and some of their other members (retailers, dentists, veterinarians) who rely on the Point of Sale exemption;
- engaged with dozens of Federal MPs from both the Government and the Opposition;
- met on three occasions with the Treasury Taskforce implementing this recommendation;
- issued various public statements;
- assisted members to write to their local member and Senator resulting in 1,441 letters between 20 February and 22 March 2019.
The AADA will continue to advocate for a compromise solution which seeks to minimise the regulatory burden and provides a sufficient time frame for any transition. We would also urge all Dealers to write or visit their local members to discuss the issue and the AADA has distributed information to assist with this.