After more than a year, Commissioner Kenneth Hayne QC released the 500 page Royal Commission report into misconduct in the Banking, Superannuation and Financial Services sector.
Amongst the 76 recommendations, 3 recommendations of the report target Australian car dealers.
Recommendation 1.7: Removal of point-of-sale exemption
Part one of the Recommendation 1.7 relates to car dealers being exempt from holding an ASIC Credit Licence (ACL).
This exemption enabled dealers to act as an agent for lenders. It also enabled car dealers to sell buyers a loan rate higher than that offered by the lender - with dealers profiting from the difference in the two rates.
This practice was banned on 1 November 2018.
The second part of Recommendation 1.7 centred on dealers - amongst other retailers - being exempt from the National Consumer Credit Protection (NCPP) Act.
The report recommended that dealers now be subjected to rules of this Act – which would require dealers to hold a credit license to process buyer applications for finance.
Recommendation 4.3: Deferred sales model for add-on insurance
The second recommendation calls for a deferred sales model for add-on insurance.
Dealers would be required to wait a specified period of time before offering add-on insurance products, giving buyers more time to consider their options and make a more informed purchase decision.
Recommendation 4.4: Cap on commissions
The third and final recommendation calls for a cap on commissions paid for add-on insurance sales.
"ASIC should impose a cap on the amount of commission that may be paid to vehicle dealers in relation to the sale of add-on insurance products."