In 1900, the eminent British physicist Lord Kelvin is said to have pronounced:
“There is nothing new to be discovered in physics now. All that remains is more and more precise measurement.“
Within three decades, Einstein’s theory of relativity and quantum mechanics had revolutionised the field. Today, no physicist would dare assert that our physical knowledge of the universe is near completion.1
Albert Einsten – b 1879 – d 1955
Awarded the Nobel Prize in Physics 1921
Ever since Einstein, the Holy Grail for physicists has been the formulation of a General Unifying Theory (G.U.T.) that combines relativity and quantum mechanics into a credible tool to describe the rules governing the universe at both the cosmological and sub-atomic levels.
Unfortunately, quantum theory and relativity are not easy bedfellows. Despite the best efforts of Professor Stephen Hawking2 and others, the G.U.T. remains elusive.
Today, we face similar unification challenges in our businesses – far removed as they are from the esoteric world of theoretical physics.
Our law makers and regulators operate at the macro level – you could say, they are the ‘relativity’ theorists. We operate our dealerships at the micro level – we’re the ‘quantum theory’ practitioners.
Will the two ever be reconciled? Like Professor Hawking, I live in hope…
ACIS’s recent draft legislative instrument and regulatory impact statement on flex commissions suggests we are making progress.
The draft is a reasonable compromise around the regulator’s need to address perceived unacceptable practice while preserving new car dealers’ abilities to make fair and reasonable revenue on the ethical sale of needed financial services.
Our key objective in the work we are now doing with ASIC and ACCC on add-on insurance is to achieve a similar acceptable outcome. ACCC’s rejection of the 20% cap proposal was a good first step.
If the wrong insurance products are sold to the wrong customers at the wrong prices, then we have an obligation to correct that sales process misalignment. On the other hand, there are many customers that genuinely need CCI, Gap and other so-called add-on products to secure a vehicle so they can conduct their trades or professions, or to simply do the shopping and get the kids to school – to live their everyday lives.
By participating in the ASIC-led working groups on the five add-on insurance products, we’ve gained a fuller understanding of the product design deficiencies that ASIC and ACCC see in some products. Their focus, for now, is to ask the insurance companies to redesign these for better consumer outcomes.
That is certainly the correct starting point.
The next step will be to agree on in-dealership processes to ensure products are sold ethically 100% of the time. The final bit is to embed these operating rules using review and compliance protocols that are practical, and affordable.
A similar process is likely to play out as the ACCC Retail Market Study takes shape this year. At the macro level, the regulators see certain issues they consider need attention. At the micro level, we can sometimes be left wondering why they think the way they do. One of AADA’s key roles is to find ways to bridge that gap.
To do so, we participate energetically in the debate, join in the review processes established by the regulators and parliament and represent our legitimate interests professionally and convincingly. This way, we can help to shape more holistic thinking, sift fact from myth and negotiate outcomes that work across the so-called ‘stakeholder landscape’.
We will also apply these principles of engagement when the government’s plans around private vehicle imports become clearer. We’re better off inside the process than being relegated to by- standers.
Of course, we are also politically active on the Vital Six as well as the range of other matters we have on our ‘long list’.
Perhaps we are not engaged in solving the big questions around the laws governing the creation and ultimate destiny of the universe. But these policy matters, and their resolution under a unifying process of consultation, engagement and debate, are as important in our world as a G.U.T. is to the physicists.
We’re probably just a lot closer to realising our objectives than they are.
We hope you are planning to participate fully in our Town Hall Meetings that commence March 20.
Chairman Terry Keating and I look forward to seeing as many of you as possible and hearing your views on the many issues we must manage as an industry.
In the meantime, as ever…I wish you…
Good luck, and Good Selling!
Chief Executive Officer
Australian Automotive Dealer Association Ltd
1 As quoted by https://www.livescience.com/
2 See Stephen Hawking – A Brief History of Time and A Briefer History of Time