Legislation proposed today requiring retail car dealers to operate with credit licences should not be rushed as it will likely increase costs for consumers and come as a blow to small, regional car dealerships.
“We understand and respect the Opposition’s desire to implement a range of recommendations from the Banking Royal Commission, but there are serious risks from rushing this legislation through,” said AADA CEO David Blackhall.
“We are still not sure what this policy will mean for the provision of finance at dealerships. The majority of new car Dealers, particularly mid-to-small and regional dealerships, do not have credit licences, and there will be a considerable cost of compliance for many businesses,” he said.
“New car Dealers already comply with consumer credit laws through the finance companies providing the credit services at the dealership. Rushing ahead to implement these changes will result in significant costs falling on smaller dealerships and those costs will ultimately have to be passed onto consumers,” he said.
“It is crucial that any point of sale changes are done through a considered consultation process which brings to together retail dealers, credit providers and government,” he said.
“We are still uncertain why the exemption needs to go. Obtaining finance from a dealership is a cost effective, convenient solution for many consumers.
Furthermore, the Royal Commission heard from ASIC that there were no concerns around the point of sale exemption and the interim report found that delinquencies in the car finance market are very low,” he said.