What is the Point of Sale exemption, when might it be removed and what does it mean for car dealerships?

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    What is the POS exemption and why does it matter?

    The point-of-sale (POS) exemption was originally introduced in 2009 - and it was never meant to be permanent. It came about as part of a 2009 reform of consumer credit protection in Australia - this introduced the requirement to have a credit license to sell finance to consumers. However, an exemption was permitted at the time to allow car dealerships to operate without a credit license given the impact it would have otherwise had on dealership profitability and the lack of a clear plan to allow dealers to continue to sell finance to consumers.

    The exemption continued ever since, despite its original intention for it to only be a temporary fix. A decade later in 2019, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has finally called it out, recommending the removal of the POS exemption.

    When will it be removed

    The short answer is no-one knows. We have heard estimates of as early as February 2020, and as late as the second half of 2020. And while no-one also knows exactly what the new rules will look like, we only know that it will seek to restrict the ability of dealerships to assist customers to obtain finance in the absence of an Australian Credit License.

    What does this mean for you 

    Given a very likely outcome of the POS exemption removal is the requirement for dealers to either stop directly selling finance to customers or to obtain a credit license, dealerships need to get ready to respond. Finance margins are tight as it is, and this change will only make it harder for you to continue providing finance (and selling cars) profitably. Credit licenses are difficult to obtain and expensive to maintain. Yet, the finance revenue stream remains critical to dealership survival.

    How Driva can help 

    Driva provides dealerships with the ability to continue to provide finance to their customers, with Driva taking the burden of providing credit assistance to customers as an authorised entity (as well as the administrative burden!). 

    Dealers can direct customers in-store to the Driva Payments platform on our website to see what options are available to them (either on the customer’s device or at a Driva in-dealer kiosk). Driva can then take it from there, taking the customer’s information, providing quotes instantly and taking the customer all the way to application submission - all without leaving our website or your dealership.

    This means car dealers can maintain their all important finance income without the need for a costly and complicated credit license, all while providing customers an exceptional and transparent financing experience (at great rates!).

    To hear more about the POS exemption removal, what it could mean for you or how the Driva platform could help, please feel free to reach out to us at dealers@driva.com.au

    William Brown

    William Brown is the co-founder of start-up Driva, an online car loan marketplace helping customers fight back against the car financing process - providing options and transparency to empower customer choice.

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