A ban on flex commissions implemented by the Australian Securities and Investments Commission (ASIC) as of 1 November 2018 has been met with encouragement from national management at Yamaha Motor Finance (YMF).

The high-profile ban on flex commissions is across the automotive finance market including motorcycles for consumers, introduced to result in fairer and more transparent loans for customers.

Flex commissions were previously paid by lenders to dealerships, which ASIC says led to loans being granted at excessive and opportunistic rates since the higher the interest rates, the larger the commissions earned by dealers.

The ban is anticipated to provide consumers interest rates based on their financial position through an individual credit score, rather than their ability to negotiate. Now the lender determines the interest rates offered and dealers cannot suggest alternate higher rates that earns them added commissions. Lower rates can be offered however, of benefit to the consumer.

YMF, which is a wholly-owned subsidiary of Yamaha Motor Australia, launched in 2002, and available throughout Yamaha dealerships across the country. YMF national sales manager Michael Singh said the new simplified model will certainly result in greater transparency for consumers and that customers will receive the right product for their financial situation.

“The flex commission changes will be good for consumers,” Singh stated. “At YMF we always try to ensure that the product is right for the customer and that it fits their budget. The new flex changes will help to speed up the loan application process within Yamaha dealerships, making it even more convenient for consumers, which is very important to us.”

Interest rates are now largely to be determined by each customer’s Equifax Australia Credit Score. YMF has invested new technology and has completed extensive training within its dealer network to coincide with regulations set by ASIC. Turnaround times for YMF applicants to receive interest rates on finance will be within seconds once data collected by the dealer is entered into the system.

An indicative rate can be quoted by dealers prior to applying for finance, however a final and accurate rate will only be generated once the application has been lodged. A responsible lending factor to ensure credit criteria must still be met, while the ability for lenders to conduct finance promotions through manufacturers will remain unaffected.

According to ASIC, lenders who do not comply with the ban face penalties of up to $420,000 per contravention and ASIC will be monitoring lenders to ensure they are complying and the prohibition is operating as intended. A review of procedures has been taking place for around five years, leading up to the flex commissions ban.