ASIC DECIDES: FLEX-COMMISSIONS OUT - Automotive ...
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OFFICIAL PUBLICATION OF AADA | MAY 2017 | ISSUE 18
ASIC DECIDES:
FLEX-COMMISSIONS OUT
ACCC DENIES COMMISSIONS CAP
HAVE WE REACHED PEAK AUTO?
WILL THE END OF MANUFACTURING DAMAGE USED CAR VALUES?
THE INEVITABLE RISE OF ARTIFICIAL INTELLIGENCE
www.automotivedealer.com.au PRINT POST 100019106
Planning for
a super future
Matthew Webster, 45 has a long way to go
before he hangs up his hat, but is easily able
to picture his retirement years.
He plans to grey nomad it around retirement than any previous generation, “Extra super contributions can be
Australia in a caravan with his wife, once thanks to changing work patterns and particularly important for people in casual
he convinces her that it will be a lot increased life expectancy. or part time employment as well as those
more fun than she expects. who’ve needed to take career breaks to
Leeanne Turner, CEO of MTAA Super raise a family or care for sick or elderly
Matt has spent his career in the motor mentions “As people start drawing relatives.”
trades and is well on the way to ensuring closer to the 60-mark, they begin to
he has enough super to be able to see think more seriously about what they With increasing life expectancy, many
the nation in comfort. He started an would like to do in their retirement and Australians could be in retirement for
apprenticeship in 1986 at the age of 16 how they will be able to finance it. With over 25 years and may well need to look
and now works in an automotive training people living longer, weak interest rates at ways to boost their super such as salary
role in NSW. and stricter rules around the age pension, sacrifice contributions and personal
these concerns have come to the contributions.
He became an MTAA Super member
forefront like never before.”
when it was first established in 1989.
Leeanne shares, “The key is to take Give your super a boost!
“I’m really happy I’ve been with MTAA
advantage of the compounding nature For ways to give your super a boost
Super. It’s the industry super fund for my
of superannuation. Super gives the while you’re still working visit
trade and has been supporting careers in
opportunity not just to grow one’s mtaasuper.com.au/take-control.
the automotive industry for over 25 years.”
employer and voluntary contributions
“I’m still a long way off retirement but I but to grow the investment returns on
do think about what I will do when I stop these contributions as well.”
working and how I will support myself
and my family.” “Small amounts can go a long way.
Making extra contributions as little as
Matt, like many Australians is not alone $25 per week early in your career can
in his concern about life after work. We result in thousands of dollars over a 1300 362 415
can now expect to spend more time in 30+ year working life.” mtaasuper.com.au/take-control
This article is issued by Motor Trades Association of Australia Superannuation Fund Pty. Limited (ABN 14 008 650 628, AFSL 238 718) of Level 3, 39 Brisbane Avenue Barton ACT 2600, Trustee
of the MTAA Superannuation Fund (ABN 74 559 365 913). Motor Trades Association of Australia Superannuation Fund Pty. Limited has ownership interests in Industry Super Holdings Pty Ltd
and Members Equity Bank Limited. The information provided is of a general nature and does not take into account your specific needs or personal situation. You should assess your financial
position and personal objectives before making any decision based on this information. We also recommend that you seek advice from a licensed financial adviser. The MTAA Super Product
Disclosure Statement (PDS), an important document containing all the information you need to make a decision about MTAA Super, can be obtained by calling MTAA Super on 1300 362 415
or visiting mtaasuper.com.au/handbooks. You should consider the PDS in making a decision.
WELCOME Australian Automotive Dealer Association
CONTENTS ISSUE 18 | MAY 2017
WELCOME
From the AADA Chairman................................................................................................................................... 4
CONTACT AADA
From the AADA CEO............................................................................................................................................ 4
P.O. Box 4530
Eight Mile Plains, QLD 4113
POLICY
CONTACT AUTOMOTIVE DEALER Flex-Commissions Out Says ASIC ..................................................................................................................5-6
Level 1, 350 South Rd
ACCC Denies Insurance Commissions Cap...................................................................................................7-8
Hampton East, VIC 3188
AADA Responds to Anti-Money Laundering and Counter-Terrorism Paper............................................9-10
Issue No.18 | MAY 2017 Review Signals Major Changes For The Australian Consumer Law As It Affects Dealers...................11-12
PUBLISHER: AADA Fair Work Act Amendment: What You Need To Know..............................................................................12-13
Queensland Trading Hours Review.................................................................................................................. 13
MANAGING EDITOR: Luke Prendergast
PRODUCTION MANAGER: Stace Nagle FEATURES
The Inevitable Rise Of Artificial Intelligence...............................................................................................14-15
ART DIRECTOR: Nick Murphy
Town Hall Meetings........................................................................................................................................... 16
ADVERTISING MANAGER: Geoff Vine Warranty Claims, Manufacturer List Prices, Warranty Audits, Clawbacks and Extrapolation
geoff@automotivedealer.com.au – Where Does It End?....................................................................................................................................17-19
Mobile: 0413 854 779 UK Dealer Satisfaction Drops Slightly: Survey...........................................................................................20-21
Phone (03) 9576 9944 | Fax (03) 9576 7277 Report A Counterfeit.......................................................................................................................................... 22
Law Centre Launches Media Campaign Against Add-On Insurance ........................................................... 23
AUTOMOTIVE DEALER
Lemon Laws Battle Rages On.......................................................................................................................... 24
DELIVERY/CHANGE OF ADDRESS
(03) 9576 9944 or Fleet Management Consolidation Set To Resume......................................................................................... 24
editor@automotivedealer.com.au Will The End Of Manufacturing Damage Used Car Values?.......................................................................... 25
Target Millennials: BDO’s Take-Out From NADA Convention...................................................................... 26
EDITORIAL
Car Affordability Best Since The 1970's........................................................................................................... 30
editor@automotivedealer.com.au
Have We Reached Peak Auto?.....................................................................................................................30-31
EDITORIAL & ADVERTISING OFFICE KPMG Executive Summary..........................................................................................................................31-32
Lvl 1, 350 South Rd, Hampton East, VIC 3188
German Parliament Wants To Ban Internal Combustion Engine By 2030................................................... 32
Lexus Drivers Most Satisfied: Poll.................................................................................................................... 32
Launching A New Model: The Good, The Bad And The Ugly....................................................................33-34
No responsibility is accepted by the publisher Telematics Becoming Common In Fleets..................................................................................................35-36
for the accuracy of information contained ‘Vending Machine’ Car Retailer To Go Public.................................................................................................. 37
in advertisements in the Automotive Dealer
UK’s EV Uptake Outstrips Charging Infrastructure........................................................................................ 37
magazine. Publication of any advertisement does
Tesla To Target Ute Market.............................................................................................................................. 40
not constitute endorsement by the publisher
of any product, nor warrant its suitability. How To Attract And Retain Millennials In Sales Team..............................................................................41-42
Advertisements are published as submitted by Open Source For Autonomous Car.................................................................................................................. 42
advertisers. New Toyota Earns 5-Star ANCAP Rating........................................................................................................ 43
Cadillac Launches Ownerless Subscription Service...................................................................................... 43
COPYRIGHT
No part of this magazine may be reproduced Kids Born Today Will Never Drive A Car… Or Will They?............................................................................... 44
without the publisher’s written permission. Unlimited Range For Electric Vehicles?.......................................................................................................... 45
We Are Not Like This!........................................................................................................................................ 45
CONTRIBUTORS
Connectivity: Privacy Versus Policing.............................................................................................................. 46
The views expressed in Automotive Dealer by
external contributors and advertisers are not
necessarily those of AADA. 2017 AADA NATIONAL DEALER CONVENTION & EXPO
AADA Expects Record Convention Numbers at New Sydney Venue.......................................................27-29
AUSTRALIAN
@AADA_ASN AUTOMOTIVE DEALER MOTORSPORT
ASSOCIATION
10 Questions For Supercars CEO, James Warburton...............................................................................38-40
WE’D LIKE TO HEAR FROM YOU.
We’d like to hear from you about what’s been schools, supporting junior sporting clubs or It’s a pity that the community work being
happening at your dealership that you think sponsoring a charity event. done by Dealers is a well-kept secret. We
could be worth passing on to our readers. intend to change that. AADA is determined
We would like to know. to generate a greater respect for new car
It can be anything from a unique sale, a fleet franchise Dealers as compassionate business
deal or a story about a member of your staff Whatever the story you have, it will be good people. Part of our strategy is to remind the
who recently accomplished a notable feat. reading. Send us the information and key media, politicians and opinion makers that,
contact details and we will follow it up. If you by employing over 66,000 people, AADA
It could be a ‘feel good’ community initiative have photographs of the endeavour so much members make a substantial contribution to
you have undertaken involving local the better. the Australian economy.
WELCOME Australian Automotive Dealer Association
FROM THE AADA CHAIRMAN
addressed the issues in detail and kept In September we are holding our annual
members updated on progress and potential conference at the International Convention
Terry Keating road blocks. Centre Sydney at Darling Harbour. This will
AADA Chairman be no ordinary convention. One of our guest
The meetings were well attended and speakers will be the chairman of the ACCC,
we estimate we got in front of Dealers Rod Sims. To hear the views of Australia's
R
representing well over 50% of our national most senior and powerful regulator first-
ecent months have seen
volume. Add to this our discussions with all hand is something not to be missed.
unprecedented potential for attack on
the NDC representatives on the Australian
our business models by regulators,
Motor Dealer Council who have, in turn, We are mindful of the pressure on Dealers’
politicians and competitors. briefed their own council members, and we time and have compressed a full agenda
In March, CEO, David Blackhall, and I made have massive support to pursue our objective into two days, with possibly only one night’s
a video titled ‘The 2017 AADA Offensive’. of substantially lifting our policy and accommodation required. If you care about
It encapsulates the issues we deal with advocacy resources. This will mean we can the future of our industry and, indeed, the
where we are on the scoreboard and our be fully competitive in the regulatory and future of your dealership, this is one event
Board's vision of the resources we need to be legislative arenas. Our futures depend on us you cannot afford to miss.
effective in the longer term. being fully effective.
I look forward to seeing you there.
David and I then flew to Melbourne, Members who couldn't attend and would
Adelaide, Perth, Brisbane and Sydney to like a copy of the presentation, please contact
hold Dealer meetings. We released the video, our Brisbane office.
FROM THE AADA CEO
But ... is that really what's happening? Even without the benefit of research, you
don't have to be a media guru to know
David Blackhall I've indicated to you previously that we are that the phenomenon of social media has
in the process of carefully reviewing exactly permanently and radically altered the way
AADA CEO
how effective we are at communicating we consume news - or what sometimes
with you, our members. As CEO, I have a passes for news. I also read recently that the
significant ongoing obligation to ensure that
W
acceptable 'load time' for an internet web
elcome to the 18th Edition of not a dollar is wasted and with that in mind page is now estimated at just three seconds.
Automotive Dealer Magazine - we are presently questioning everything we After that, consumers/readers just move on.
an Edition that is, once again, do - including the effectiveness of producing,
crammed with must-read articles on policy in the digital age, a 'traditional' magazine Talk about instant gratification!
and regulatory developments as well as like the one you are holding in your hands
general interest pieces on the many changes right now. But we must sensibly ask why our members
that are washing across our industry every would be any different - hence the urgency
day. To determine exactly what communication of our communications review.
tools are best for new car dealers in the 21st
And we unveil details of the 2017 century we have commissioned a Dealer Our job is to make sure these are not just
Convention which this year has the theme Pulse Survey. More details will follow soon, empty words but are in fact 'watch words' for
of innovation, technology & engagement. but please participate when offered the the way we approach our responsibility to
The line-up of top international and local opportunity to do so. Honest feedback is the deliver world-class advocacy on your behalf.
speakers is the best we’ve ever had. only way we can accurately chart the needed The range of topics covered in this latest
forward course. Edition of the magazine is the proof that we
Most importantly, register your attendance are in fact focused on those 'watch words'.
as a delegate! This and other work we are doing on our
communications plan is ongoing, so it is Please take the time to inform yourself on
Our editorial team puts this outstanding premature to rule anything in our out just the latest developments at AADA - it's only
publication together in the fervent belief that yet. That said, as in all businesses, if you good business to do so.
dealers and their staffs are well informed stand still you eventually become irrelevant -
and benefit by reading it. so change is inevitable.
4 | MAY 2017 | automotivedealer.com.au
POLICY Australian Automotive Dealer Association
FLEX-COMMISSIONS OUT SAYS ASIC
A
SIC announced in March that it will earn a larger commission if, for example, the A summary of ASIC’s proposals includes:
prohibit flex-commission in the car interest rate is 10% rather than 8%”.
finance market but will still allow • flex-commissions will be banned
lenders to pay other types of compensation ASIC has decided on a prohibition as a but other financial benefits will be
comprehensive, industry-wide solution that allowable, e.g. reverse flex
to car Dealers.
will deliver broad changes for the benefit of
ASIC considers flex-commissions “are consumers. It will apply to car Dealers and • the lender will set the rate which the
arrangements in which a party other than finance brokers. Dealer can discount by a maximum of
a lender (typically either a car Dealer or 200 basis points
ASIC will, however, allow Dealer financial
a finance broker) can effectively set the
benefits for arranging finance, including • origination fees are set by the lender
interest rate payable by the consumer, and
upfront commissions for individual loans,
earn a higher commission the higher the subject to certain conditions
volume bonuses, soft dollar benefits and
interest rate above a Base Rate agreed to with
origination fees. A Dealer can offer a lower • there will be transition period, with
the lender (providing that the transactions
interest rate up to a maximum of 200 basis
otherwise are within parameters set by the the prohibition commencing on 1
points below the nominated minimum
lender). This means the intermediary can September 2018
interest rate.
POLICY Australian Automotive Dealer Association
• a legislative instrument will be commissions for individual loans, the financial disadvantage from flex-
introduced into the Parliament and volume bonuses according to the level commissions was the result of car Dealers
subject to review, and; of business arranged and soft dollar who operated in reliance on the exemption.
benefits. However the practice is not limited in this
• the prohibition does not apply to way and is engaged in by intermediaries
novated leasing and salary packaging • a Dealer origination fee (Dealer fee) for who hold credit licences or have been
companies, as ASIC does not have assisting in the provision of finance. appointed as credit representatives by a
statutory powers to regulate them. licensee.
Dealer origination fees
ASIC proposes to use its statutory powers Novated leases
to modify provisions of the National Lenders must set a maximum price for
origination fees (which are likely to be Novated leases are not regulated by the
Consumer Credit Protection Act 2009
based on reasonable reimbursement of National Credit Act, and ASIC does not
(National Credit Act) so that the amount
the costs associated with arranging a loan have the powers to regulate them in the
paid in commissions is not linked to
and intermediaries are prohibited from same way in respect of flex-commissions.
the interest rate and the lender has
influencing or proposing the amount of Dealers affiliated with novated lease
responsibility for determining the interest
the fee where any benefit to that person providers would, therefore, be entitled to
rate that applies to a particular loan. ASIC
increases or decreases by reference to an receive flex-commissions. ASIC indicated it
acknowledges that it is desirable to allow
increase or decrease in the amount of the could monitor conduct in this market to see
car Dealers some flexibility to reduce
fee). if further reforms are needed in the future.
interest rates to secure a loan.
Point-of-sale (POS) exemption in Reg 23 Dealer can offer a lower interest rate than
ASIC has prepared a draft legislative
of National Credit Regulations the nominated interest rate
instrument with a transition period
of around 18 months to implement A Dealer can offer a lower interest rate than
the prohibition. The draft legislative ASIC does not consider the need to remove
the POS exemption that applies to Dealers. the nominated interest rate in the following
instrument modifies the National Credit circumstances:
Act using ASIC’s statutory power in s109(3)
ASIC understands that the majority of
(d) of the Act. If the negotiated contract interest rate is
car Dealers engage in credit activities
by relying on the POS exemption rather lower by 200 basis points or less than the
Legislative Instrument (LI) – ASIC interest rate nominated by the lender, the
Credit (Remuneration Arrangements) than as credit licensees or as credit
representatives. This does not make the amount of the commission can vary (so
Instrument 2017 that the car Dealer compensates the lender
Dealer an agent of the lender.
for lower interest charges through a lower
As currently drafted the LI would apply to
Under the National Credit Act lenders commission).
all credit contracts and consumer leases
regulated by the National Credit Act. Car are under an obligation to ensure that
car Dealers exercise their discretion to If the negotiated contract interest rate is
Dealers would be able to reduce the interest lower by more than 200 basis points than
rate by up to 200 basis points and receive a determine or propose interest rates in a way
that is efficient, honest and fair. the interest rate initially nominated by the
lower commission. lender, then the amount of commission
Section 180A of the National Credit Act cannot vary. This would mean the lender
Dealer fees charged to a customer for
provides for remedies against brokers needs to decide whether or not to provide
providing services in relation to arranging
and other intermediaries for engaging in a discount given that they would bear the
finance is to be controlled by lenders to
conduct that is unfair or dishonest where entire amount of the reduction in revenue
ensure the amount of fees charged cannot
that conduct has the result of a consumer (whereas currently, under flex-commission
be varied up or down.
entering into a contract they would not arrangements, the cost of this reduction
Transition period otherwise have entered into, or the terms is shared between the lender and the car
of which are different from a contract the Dealer).
ASIC recognises the need to allow a consumer would otherwise have entered
reasonable period of time for lenders to into. Other
develop different pricing models, with
This remedy also extends to Dealers ASIC’s analysis considers that lenders are
the interest rate linked to the risk of the
operating under the POS exemption. likely to design ratings for risk pricing
individual transaction. The draft LI sets a
within parameters that mean they receive
commencement date for the prohibition of
ASIC noted the views of some stakeholders a similar level of income in interest.
interest rates.
that the continuation of the POS exemption There would be a smaller percentage of
Remuneration arrangements in the car means that the market is not competitively contracts written at very high interest rates.
finance industry neutral. They argued that it means there ASIC expects that the main impact on
is greater regulatory burden on licensees intermediaries would be costs arising from
ASIC considers that Dealers have two main and credit representatives when arranging the need to renegotiate existing agreements
sources of finance-related income from a finance, compared to car Dealers. (as with lenders).
sale:
ASIC considers there would be merit
• financial benefits, including upfront in considering this issue further if
6 | MAY 2017 | automotivedealer.com.au
POLICY Australian Automotive Dealer Association
ACCC DENIES INSURANCE
COMMISSIONS CAP
I
n a major win for Dealers, the Australian proposed cap would benefit insurers at the report, ASIC also stated that insurers who
Competition and Consumer Commission expense of car Dealers and would create failed to address ASIC's findings will be
(ACCC) has denied 16 insurance companies more opportunities for collusion and shared subject to further regulatory action.
authorisation to jointly impose a 20 per cent knowledge between insurers.
cap on commissions paid to motor vehicle Speaking at the Insurance Council of
Dealers who sell add-on insurance products. The ACCC said it was concerned a joint cap Australia Annual Forum in Sydney in
on commissions might “significantly delay February, ASIC Chairman, Greg Medcraft,
The ACCC last month issued its final the development of more effective solutions” blamed insurance companies for designing
determination on the matter, stating its belief to the 'problems' it had identified in the add- poor products. Some commissions can be as
that the cap was unlikely to change sales on insurance product market. high as 79 per cent.
incentives for add-on insurance products;
improve quality of the add-on insurance The insurers made their application following “Insurers have designed complex and
products being offered for sale, or improve an ASIC report last September that criticised extremely poor value products and put their
the information given to consumers about the sale of add-on insurance products reputations at risk,” he said.
those products. The ACCC also said the through the Dealership channels. In that
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POLICY Australian Automotive Dealer Association
“The general insurance industry has put
forward a range of proposals to address
ASIC’s concerns. We are pleased to
see industry engaging on these issues,
but overall the proposals fall short of
addressing the underlying issues in this
space.
“The insurance market continues to be at
the forefront of much of ASIC’s regulatory
agenda.”
In the absence of authorisation by the
ACCC of the proposed joint cap on
commissions, a collective step taken by
insurers to cap sales commissions for
Dealers would run the risk of contravening
the prohibitions against cartel conduct in
the Competition and Consumer Act 2010.
working group with ASIC to develop a final in to take on the might of the insurance
The ruling is subject to appeal but ASIC
solution, which will hopefully be resolved companies. It was not an easy process, with
has accepted the determination. So as far
within the next two months. the insurance companies at times reluctant
as AADA is concerned, the matter has been
to even meet with AADA.
settled in favour of Dealers with the finer It is a very pleasing result for us,
points still to be ironed out. AADA, AP considering the amount of work we put
Eagers and AHG will now participate in a
You need a partnership.
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(With Lucy Kelly - Client Relations Manager)
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8 | MAY 2017 | automotivedealer.com.au
POLICY Australian Automotive Dealer Association
AADA RESPONDS TO
ANTI-MONEY LAUNDERING AND
COUNTER-TERRORISM PAPER
A
ADA has responded to the Attorney- (STRs) triggered by their obligations as application of a full AML/CTF regime a
General's Department consultation insurance intermediaries. disproportionately burdensome response to
paper on anti-money laundering a modest ML/TF risk.
and counter-terrorism financing, arguing “A cash transaction prohibition (at least
that banning cash sales is the best way to for the vehicle purchase, even if not for “Whatever incidence of ML/TF there is
prevent high-value Dealers being used for the insurance product sale), combined in vehicle retailing, AADA believes that
those criminal activities. with existing regulation – involving motor the burden of regulation can only be
vehicle Dealer licensing, motor vehicle justified if the regulation directly targets an
In November 2016 the Attorney-General's registration and record keeping – would identifiable risk factor and the regulation
Department issued a consultation paper substantially mitigate the risk of ML/ can be effective in materially mitigating or
entitled High-value dealers: a model for TF without adding a further burden on managing that risk,” the submission says.
anti-money laundering and counter- business. Motor vehicle Dealers should not
terrorism financing regulation under be subject to the more complex AML/CTF AADA understands the process of analysis
Australia's (AML/CTF) regime. regime,” the AADA submission says. of risk factors in other industries that leads
to the re-design or modification of business
In a submission to the Department AADA “If motor vehicle Dealers are to be subject processes to reduce ML/TF risk. Vehicle
argued that the Government's AML/ to the AML/CTF regime, AADA supports retailing is a simple process involving one
CTF objectives would be best and most the proposed regime feature that the service, one national jurisdiction and one
efficiently achieved by simply legislating to regime would be inapplicable to Dealers legal transaction (or 'delivery method').
prohibit cash vehicle sale transactions by who elect not to deal in cash for vehicle AADA sees no practical scope to redesign
Dealers. sales. or modify these elements other than to
explicitly prohibit cash as a medium of
This, however, ignores the practicality “In any event, the regime should not be exchange.
of commercial operations where some triggered by activities other than vehicle
franchised car Dealers contract with sales. Sales of parts and accessories, and The other risk factor is, of course, that
customers who reasonably pay cash and servicing, are relatively low value and not associated with the particular customer.
why, accordingly, many of them have possible activities of money laundering.” The customer may or may not possess the
moved to AUSTRAC online for current proceeds of crime. Ordinarily a goods
significant cash transaction reports AADA argued that certain attributes retailer will have no insight into the
(SCTRs) and suspicious transaction reports of the motor retailing industry make character or source of funds held by a
POLICY Australian Automotive Dealer Association
customer. Unlike a financial institution of obligations around identification and Lastly, if some form of AML regime is to
or wealth adviser, a retailer's relationship record keeping, with additional procedures be applied (with or without opt-out by self-
with a customer is purely transactional. A at further cost, would involve more excluding cash transactions), it needs to be
retailer has no legal means or persuasive cost than benefit. AADA regards this as a simplified regime. Conduct of Dealer-
capacity to glean an insight into a inefficient. specific risk assessments would be complex,
customer's financial affairs. costly and fundamentally unproductive.
“Any proposed new obligations under Likewise, formulation of AML/CTF
The best contribution a vehicle Dealer can federal law must be tested, as incremental programs would over-complicate the
make to the wider AML/CTF effort is to changes, for their cost and their benefit. In design and implementation of targeted
reliably record a customer's transaction any event, they must recognise and build AML/CTF measures. Suspicious matter
and the source of the customer's electronic upon, rather than duplicate, existing state reports (SMRs) are unlikely to be generated
funds transfer from an institution or and territory regulation,” AADA pointed given the limited information and insights
business that is itself subject to CDD out. available to Dealers.
obligations (such as a bank or a finance
lease provider). AADA submitted that the Government's AADA is supportive of Government
AML/CTF objectives would be best efforts to minimise money laundering and
“AADA is concerned to avoid motor vehicle and most efficiently achieved by simply therefore supports efficient and effective
Dealers becoming subject to additional legislating to prohibit cash transactions (for steps to that end. AADA believes that
regulatory obligations where fulfilling vehicle sales) by Dealers. legislating to prohibit cash transactions
those obligations would not represent a by Dealers would be simple, effective and
material gain in the fight against ML/ “Existing law provides a record of
sufficient.
TF. Logically, this means that additional purchaser, vehicle and price data.
regulation that does not generate new Dealers’ business and banking records AADA expressed its desire to remain
information and does not reduce risk contain details of inbound bank transfers engaged with the Attorney-General's
should not be imposed,” the submission and credit card purchases. All of this Department on this issue and hopes to
argues. information is presently available to receive the opportunity to meet to discuss
law enforcement authorities and can be its submission. AADA would also expect
“A statutory prohibition on acceptance easily made available for inspection by to be consulted on any further steps,
of cash for vehicle sales would be new, AUSTRAC. Law enforcement authorities including any contemplation of draft
simple and effective in ensuring that each also have access to motor vehicle registers. legislation.
transaction is linked to an identifiable
flow of funds through a financial “Accordingly, AADA submits that The Attorney-General’s Department has
institution (which is itself subject to AML/ extension of the AML/CTF regime (or engaged KPMG Australia to undertake
CTF regulation). AADA regards this as parts of it) to motor vehicle Dealers is an independent cost benefit analysis of
efficient.” unnecessary and should not occur. a model for regulating the motor vehicle
sector. KPMG have created a questionnaire
By comparison, there is existing state and “If franchised new motor vehicle Dealers
regarding costs and have sought the
territory legislation that requires motor are to be subject to the AML/CTF
assistance of Dealers in determining a cost
vehicle Dealers to be licensed and to create regime, AADA supports the proposed
benefit analysis.
and keep records of persons transacting regime feature that the regime would be
and the vehicles subject of the transaction inapplicable to Dealers who elect not to sell
(which vehicles are also registered). A new vehicles for cash.”
law that imposes a new and different set
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10 | MAY 2017 | automotivedealer.com.auPOLICY Australian Automotive Dealer Association
REVIEW SIGNALS MAJOR CHANGES FOR
THE AUSTRALIAN CONSUMER LAW AS IT
AFFECTS DEALERS
Evan Stents
Lead Partner,
Automotive Industry
Group, HWL
Ebsworth Lawyers
O
n 19 April 2017 Consumer Affairs
Australia New Zealand tabled its report
to the Federal Government of its review
of the Australian Consumer Law (ACL). The
review of the Australian Consumer Law
(ACL Review) made a number of wide-
ranging recommendations that will have an
impact on how Dealers manage complaints failure (whether or not those minor unconscionable conduct to apply to
concerning vehicle defects. The ACL Review failures relate to the same or different publicly listed companies.
also considered a report by the Productivity issues)
Commission concerning the administration In addition to the amendments to the
and enforcement of ACL complaints. • imposing additional requirements consumer guarantees, the ACL Review
relating to extended warranties also considered a detailed report by the
The purpose of the ACL Review was to – including additional disclosure Productivity Commission regarding how
assess the effectiveness of the ACL (including requirements such as a comparison to the ACL is administered and enforced, and
its administration and enforcement) in ACL rights and a 10-day cooling-off the role regulators play in making the law
establishing and making accessible a common period (which becomes an unlimited accessible and effective for consumers.
set of consumer protection rights and cooling-off period if the disclosure
obligations. obligations are not met) In its report the Productivity Commission
recommends the Government consider
The recommended changes include amending • adding additional guidance for what expanding the powers of regulators to compel
and expanding the existing consumer 'reasonable durability' and 'unsafe' means businesses (including motor vehicle Dealers)
guarantees in favour of consumers. Many of in the context of consumer guarantees to participate in alternative dispute resolution
the recommended changes will likely have such as mediation (without the need for legal
a significant impact on new motor vehicle • expanding consumer guarantees so that proceedings to be on foot).
Dealers. These include: they apply to all online auction sales
The ability to actually compel (not just
• amending the consumer guarantees to • requiring any additional fees and charges encourage) businesses to participate in
specify that where a good fails to meet to be included in the headline price for alternative dispute resolution processes,
a guarantee within a short, specified online sales without there being a legal proceeding on
period of time, a consumer be entitled to foot, would represent a significant shift from
a refund or replacement without needing • reducing the evidentiary burden on
the current regulatory and enforcement
to prove a 'major failure'. (For example, consumers to prove claims for breaches of
environment.
similar legislation in the UK specifies a the consumer guarantees
30-day refund entitlement where goods Among other issues cited in its report the
• increasing maximum financial penalties
fail to meet certain standards.) Productivity Commission considered that:
for breaches of the ACL, and
• clarifying that multiple minor failures can • the Government should consider
• extending the ACL prohibitions on
now accumulate to amount to a major implementing a public register of
automotivedealer.com.au | MAY 2017 | 11POLICY Australian Automotive Dealer Association
consumer complaints (subject to In preparing its report the Productivity According to the ACL Review report,
appropriate vetting) Commission considered submissions that Commonwealth, State and Territory
included calls for industry-specific retail Consumer Affairs Ministers will meet in late
• the Government should consider ombudsmen to assist consumers resolve 2017 to decide on what proposed reforms
streamlining the differences in disputes under the ACL. should be recommended to the Council
administration and enforcement of the of Australian Governments Legislative and
Australian Consumer Law between the While the Productivity Commission Governance Forum on Consumer Affairs
various State jurisdictions. A specific has not made any recommendation for (CAF). Once CAF has then agreed to the
example of an issue in this area was the appointment of an industry-specific recommended reforms, they will be put
the different State jurisdictional limits, ombudsman for the new motor vehicle to Parliament as a reform package for
which prevented consumers in certain retail industry, it has recommended that the implementation. No estimated timeframe has
States from commencing low cost legal Government consider expanding the powers been given for this to occur.
proceedings in relation to motor vehicles of the ACL regulators where there is no
industry-specific ombudsman (such as in the A further review of the ACL has been
• there should be additional Government retail new motor vehicle industry). recommended to be conducted in 2021, which
funding for consumer advocacy groups suggests that the proposed reforms will be
The ACL Review's recommendations, enacted before that time.
• maximum financial penalties available including those of the Productivity
under the ACL are too small, and Commission, outline a reform package This article was written by Evan Stents - Lead
for the Consumer Affairs Ministers of the Partner, and Christian Teese - Senior Associate,
• the Government should consider expanding Automotive Industry Group | HWL Ebsworth
Commonwealth, States and Territories to
all ACL regulators' powers to issue Lawyers
consider and implement.
infringement notices to deal with a range of
minor offences in a cost-effective manner.
FAIR WORK ACT AMENDMENT:
WHAT YOU NEED TO KNOW
The new Bill introduces a higher scale of
penalties for ‘serious contraventions’ of
prescribed workplace laws, with increased
penalties for record-keeping failures.
The amendments are designed to make
franchisors and holding companies responsible
for underpayments by their franchisees
or subsidiaries where they knew or ought
reasonably to have known of the contravention
and failed to take reasonable steps to prevent
them. The new responsibilities will only apply
where franchisors and holding companies
have a significant degree of influence or
control over their business networks.
The changes also expressly prohibit employers
from unreasonably requiring their employees
to make payments (e.g. demanding a portion
of their wages to be paid back in cash).
I
n March, following on from the 7-Eleven This has application to franchisors/OEMs/ They strengthen the evidence-gathering
scandal, the Federal Government introduced distributors who have a significant degree powers of the Fair Work Ombudsman to
legislation in the House of Representatives of influence or control over the franchisee’s ensure that the exploitation of vulnerable
to amend the Fair Work Act to better protect affairs. Arguably, the Dealer Agreement gives workers can be effectively investigated.
vulnerable workers. the franchisor that power.
12 | MAY 2017 | automotivedealer.com.auPOLICY Australian Automotive Dealer Association
EXTRACT FROM EXPLANATORY networks. A number of case studies are provided networks, turning a blind eye to contraventions
MEMORANDUM in the Senate Education and Employment is not an option under the new provisions.
References Committee’s report entitled A National Franchisors and holding companies are held
Part 2—Liability of responsible franchisor Disgrace: The Exploitation of Temporary Work responsible for certain contraventions of the Act
entities and holding companies Visa Holders, March 2016 and reports of the Fair by businesses in their networks if they knew or
35. Part 2 of Schedule 1 amends the Fair Work Work Ombudsman. could reasonably be expected to have known
Act to insert new provisions to hold ‘responsible that the contraventions would occur, or that
38. Under the existing laws a person may be held
franchisor entities’ (referred to as franchisors) contraventions of the same or a similar character
responsible for being ‘involved in’ a contravention,
and ‘holding companies’ responsible for certain were likely to occur and they had significant
even if they are not the direct employer (section
contraventions of the Act by businesses in their influence or control over the companies in their
550). This is known as accessorial liability. There
networks. The new provisions supplement and network. There is no liability if the franchisor or
is no accessorial liability if a person genuinely ‘did
do not override the existing accessorial liability holding company has taken reasonable steps to
not know’.
provisions (section 550). deal with the problem.
39. The provisions only apply to responsible
36. Some franchisors and holding companies have 41. The Fair Work Act does not extend to impose
franchisor entities which have a significant
established franchise agreements and subsidiaries franchisor obligations on corporations operating
degree of influence or control over the relevant
in their corporate structure that operate on a completely outside Australia. That is, companies
franchisee’s affairs. By definition, holding
business model based on underpaying workers. that do not have any operations in Australia and
companies have control over the affairs of their
Some have either been blind to the problem or not have simply entered into a master franchisor
subsidiaries. Control relates to the affairs of the
taken sufficient action to deal with it once it was relationship with an Australian company (even
franchisee or subsidiary broadly, not only as to
brought to their attention. if the Australian company is a subsidiary of the
minor matters that would not have any impact
foreign company).
37. Recent highly publicised cases of exploitation on the management and operational decisions of
of vulnerable workers, including by 7-Eleven the business. 42. The new provisions do not displace the
franchisees, demonstrate more needs to be done obligations of employers to continue to comply
40. For franchisors and holding companies
by franchisors and holding companies to protect with Australian workplace laws or introduce
with significant influence of control over their
vulnerable workers employed in their business joint employment arrangements.
QUEENSLAND TRADING HOURS REVIEW
I
n August last year the Queensland The Fair Work Commission has concluded while protecting retail workers.
Government approved Terms of Reference a review of weekend penalty rates in the
for a review of Queensland’s retail trading retail and fast food industries, as Queensland While the trading hours review did not
hours. The review was conducted by an considers adopting Sunday trading. include the Motor Vehicle Award, the retail
independent reference group chaired by motor industry could possibly be affected in
Mr John Mickel, former Speaker of the The review report makes 13 recommendations the short- to medium-term future, so this is
Queensland Legislative Assembly. The group for trading hours’ reform. The State something for Dealers to be aware of. Dealers
considered 179 submissions from businesses, Government has responded to the in Queensland are opposed to Sunday trading
consumers, workers and other community recommendations and will broaden and primarily because of the costs involved and the
representatives. simplify Queensland’s allowable trading hours reluctance of staff to work on Sundays.
automotivedealer.com.au | MAY 2017 | 13FEATURES Australian Automotive Dealer Association
THE INEVITABLE RISE OF ARTIFICIAL
INTELLIGENCE
M
ore than most industries the on AI technology. Seventy-one per cent of and vehicles are continuously connected to
automotive industry is at the front respondents said the rise of AI is “inevitable” the internet. The centralised aspect of ‘cloud
line of the technological revolution and will be disruptive. computing’ allows for far greater processing
that will see artificial intelligence (AI) and power, access to data, analytics and support.
automation completely alter the way we AI is already impacting the automotive
live, move and do business. industry. Fully-autonomous cars are coming Analysts predict that by 2020 – just three years
and driver assist technology is commonplace away – 250 million cars will be connected
A new report, titled “Amplifying Human (emergency braking, collision avoidance to the internet. They will help drivers locate
Potential: Towards Purposeful Artificial systems, parking assist, intelligent cruise restaurants, pay for fuel without leaving
Intelligence” loosely defines AI as “any control, etc) and becoming more advanced by their cars, even communicate with the home
activity that used to only be done via human the day. refrigerator to remind the owner to buy milk!
intelligence that now can be executed by a
computer”. In October last year Tesla announced that all Software will be updated wirelessly,
new vehicles it produced would be equipped manufacturers and fleet managers will
These technologies already handle tasks such with the hardware necessary for autonomous remotely monitor performance, fuel use
as visual perception, speech recognition, driving. Only software validation and and mileage, and perform diagnostics. The
decision-making and natural language regulatory approval is required before fully- immediate feedback from systems and sensors
processing in support of products and services automated self-driving cars join the traffic will provide manufacturers with field data
used by millions of people every day. fleet. to use in work on improvements in future
models.
The Indian multinational company, Infosys, The cloud and the internet of things
commissioned a survey of 1,600 major Connectivity means greater safety
business leaders in various industries We are moving towards a fully-connected
around the world regarding their opinions world when all appliances, machinery, plant Once all cars are connected to each other via
14 | MAY 2017 | automotivedealer.com.auvehicle-to-vehicle (V2V) technology, they can
let each other know what they are doing – and
precisely where they are and how fast they are
moving – at any given moment. For example
a car in which the driver had failed to brake
could alert oncoming traffic not to enter an
intersection.
Parents will be able to monitor and restrict
their offspring's car use, setting speed limits,
curfews and/or geographic limits.
Cars will become Wi-Fi hotspots, allowing
users to access email and search the internet
via voice command. It will change the road
trip experience forever!
Insurance companies have already begun
partnering with OEMs and tech companies
to develop the means to identify risky drivers.
Near-misses, driver alertness and unsafe
driving habits will be monitored and reported
on, allowing insurance companies to adjust the two countries most prepared for the AI about positive economic and societal change.
premiums appropriately. age, with maturity index scores of 56 per cent
and 55 per cent respectively. The report said However, 90 per cent of the leaders believe
Allianz is working in partnership with BMW that their employees have concerns about AI
both countries had “fewer legacy systems and
i Ventures, Toyota Research and technology regarding data safety (43 per cent) and privacy
business processes” delaying or obstructing the
developer, Nauto, to develop AI products to (34 per cent).
adoption of AI technologies.
assist with driver safety, fleet management and
logistics. Among the participating countries, they were Likewise, 88 per cent said they thought that
followed by Germany (53 per cent), the US (46 customers had concerns about AI – first
Who's ready? and foremost a lack of understanding about
per cent), UK and France (both 44 per cent).
The Infosys report ranked countries and Australia bought up the rear with what was AI’s use (41 per cent) as well as a mistrust of
certain sectors of the economy based on an AI described as “a respectable average score” of 40 technology (38 per cent).
‘maturity index’ based on survey answers and per cent.
Adapting
converted to a total score of up to 100 per cent.
Auto industry at the forefront
Businesses and workforces will have to adapt
The report said the small number of to the introduction of AI. Some jobs will
The pharmaceutical and life sciences industry
organisations ranking in the highest maturity become redundant, however 80 per cent
ranked the highest at 58 per cent, followed
level of 80 to 100 per cent had “already of respondents said they would retrain or
by automotive and aerospace (54 per cent),
successfully deployed AI throughout their redeploy human employees whose jobs are
telecommunications companies (52 per cent),
businesses and are reaping the benefits”. impacted by AI technologies.
energy, oil/gas and utilities (51 per cent),
In contrast, a “small but significant” group of manufacturing (50 per cent), fast moving
More than half (53 per cent) said they were
organisations scored between zero and 20 per consumer goods (50 per cent), healthcare (50
investing in skills development for their
cent, having “no current deployment of such per cent), financial services (47 per cent) and
human workers. A massive 95 per cent of
technologies and no plans to do so in the near retail (44 per cent).
Chinese organisations said AI would result in
future”. greater investment in their workforces. France
The only sector that scored relatively low by
comparison was the public sector at 32 per (90 per cent) and Germany (89 per cent)
As you would expect with statistics, most
cent. That suggests government organisations followed, with the UK and US organisations at
respondents scored in the middle group (40
probably have the longest way to go in terms of 82 per cent and 76 per cent, respectively.
to 59 per cent), which the report labelled the
“explorers”, with “partial deployments of AI” adapting AI technologies.
“This is an optimistic sign that fears may be
that were “proving their value.” The explorers misplaced and that AI deployment and worker
Early adopters to profit
expressed the desire to introduce more AI redundancy do not necessarily go hand-in-
initiatives. Business leaders surveyed said they expect a hand,” the Infosys report concluded.
39 per cent boost to revenues on average and a
China, India, lead the pack
37 per cent reduction in costs by the year 2020.
According to the report, China and India are Three-quarters said they expect AI to bring
automotivedealer.com.au | MAY 2017 | 15FEATURES Australian Automotive Dealer Association
TOWN HALL MEETINGS
T
hroughout March, AADA held a achievements, such as
series of 'town hall meetings' with turning back the 'New
Dealers around Australia in order Zealand model' of open
to communicate the Association's current slather on used imports,
position, priorities and needs. We were pleased as well as those things
with the reception we received and believe yet to be done, including
Dealers who attended had much to take away. private imports and the
next stage of insurance
Chairman, Terry Keating, and CEO, David commissions.
Blackhall, conducted the meetings, conveying
to attendees the scope of the work AADA had Mr Blackhall stressed
done on their behalf since AADA reformed that in order to achieve
three years ago. These things include: its full potential as an
• attending more than 30 government and advocacy body for
regulatory hearings and working groups Dealers, AADA needs
more buy-in from
• developing more than 25 submissions to
Dealers. If we could
regulators and government
collect just one extra dollar from every car 5. Expanded lobbying and political advisory
• forging effective working relationships sold, our resources would grow by $1 million services, particularly at state level
with politicians and bureaucrats and we could afford the proper infrastructure
6. Modern, relevant social media
required to achieve our goals.
deployment
• briefing cabinet ministers, backbenchers
and opposition members Additional investment required to build 7. Updated communications and marketing
capability of secretariat: strategies and assets
• making, where possible, a common cause
with the MTA's and FCAI 8. Dealer interactive tools and presentation
1. Senior communications and policy
packs
director
• hiring the first-ever Canberra political
9. Robust database
and policy advisors, and 2. Strategic analyst
10. Dealer pulse surveys.
• Dealer communications – magazine, 3. Revenue and membership manager/
website, Convention, newsletters. analyst We urge all Dealers to ensure they are paid-up
members of AADA. Being united together
4. Canberra, Sydney or Melbourne
Our two leaders highlighted some of AADA's is the only way we can take the fight to the
representative office
powers that be.
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