Flex Commission Prohibition

A new law commencing on 1 November 2018 prohibits arrangements where introducers are provided with a delivery rate to which introducers can add a margin to determine the borrower rate – subject to some exceptions. Lenders, brokers, and other introducers need to ensure that their commission arrangements do not breach these rules.

The ASIC Credit (Flexible Credit Cost Arrangements) Instrument 2017/780 inserts new provisions into the National Consumer Credit Protection Act 2009.

The new law prohibits lenders directly or indirectly entering into a flexible cost arrangement defined as an arrangement under which both of the following apply:

• the benefits paid to an introducer are determined in whole or in part by the interest rate; and