{"id":"F2017L01141","name":"ASIC Credit (Flexible Credit Cost Arrangements) Instrument 2017/780","slug":"asic-credit-flexible-credit-cost-arrangements-instrument-2017-780","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":97025,"registerId":"commonwealth-F2017L01141-current","compilationNumber":null,"startDate":"2026-04-02","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"“53A Obligation not to provide certain b","sectionType":"section","heading":"“53A Obligation not to provide certain benefits","content":"#### “53A Obligation not to provide certain benefits\n\n    (1) This section and section 53B apply to each of the following:\n    (a) a licensee (regulated person) if the licensee:\n    (i) has entered into a flexible credit cost arrangement in relation to a credit contract (other than a home loan) or a consumer lease; and\n    (ii) is, or is proposed to be, a credit provider or lessor under the credit contract or consumer lease;\n    (b) a licensee (regulated person) and an exempt special purpose funding entity (regulated person) if all of the following apply:\n    (i) the licensee is party to a servicing agreement with the exempt special purpose funding entity in relation to a credit contract (other than a home loan) or a consumer lease;\n    (ii) the licensee or the exempt special purpose funding entity has entered into a flexible credit cost arrangement in relation to the credit contract or the consumer lease;\n    (iii) the exempt special purpose funding entity is, or is proposed to be, a credit provider or lessor under the credit contract or consumer lease.","sortOrder":0},{"sectionNumber":"Requirement not to provide certain benef","sectionType":"section","heading":"Requirement not to provide certain benefits","content":"#### Requirement not to provide certain benefits\n\n    (2) Subject to subsections (3) and (4), a regulated person must not:\n    (a) in any case—give; or\n    (b) if paragraph (1)(b) applies—engage in conduct that results in another regulated person giving;\n    the introducer under the flexible credit cost arrangement or an associated person any benefit, whether monetary or non-monetary, if:\n    (c) the amount of the benefit is determined by, or varies by reference to, (in whole or in part):\n    (i) in the case of a credit contract—the annual percentage rate under the contract; and\n    (ii) in the case of a consumer lease—the amount (rental charge) by which the rental payable under the lease exceeds the cash price of the goods; and\n    (d) the introducer or an associated person has determined, proposed or influenced the amount of the annual percentage rate or rental charge (as the case may be).\n    Note: See the definition of determines, proposes or influences for various circumstances that do not amount to determining, proposing or influencing the amount of the annual percentage rate or rental charge.\n    Civil penalty: 2,000 penalty units.\n    (3) Subsection (2) does not apply to a benefit that is determined by, or varies by reference to, an annual percentage rate or rental charge if:\n    (a) in the case of an annual percentage rate—both the following are satisfied:\n    (i) the annual percentage rate is not more than the annual percentage rate (specified rate) specified by a regulated person:\n    (A) before any determination, proposal or influence referred to in paragraph (2)(d); and\n    (B) as the maximum annual percentage rate that may apply with respect to the credit contract; and\n    (ii) either:\n    (A) the annual percentage rate is not less than the rate (base rate) that is 200 basis points less than the specified rate;\n    (B) otherwise—the amount of the benefit is equal to the amount that would be payable if the annual percentage rate were the base rate; or\n    (b) in the case of a rental charge—both the following are satisfied:\n    (i) the rental charge is not more than the amount of the rental charge (specified rental charge) specified by a regulated person:\n    (A) before any determination, proposal or influence referred to in paragraph (2)(d); and\n    (B) as the maximum rental charge that may apply with respect to the consumer lease; and\n    (ii) either:\n    (A) the rental charge is not less than the amount (base amount) that is 4% less than the specified rental charge;\n    (B) otherwise—the amount of the benefit is equal to the amount that would be payable if the rental charge were the base amount.\n  (4) Subsection (2) does not apply to a benefit given by a regulated person to any of the following:\n  (a) a director or employee of the regulated person;\n  (b) a related body corporate of the regulated person;\n  (c) a director or employee of a related body corporate of the regulated person.\n  Offence\n  (5) A person commits an offence if:\n    (a) the person is subject to a requirement under subsection (2); and\n    (b) the person engages in conduct; and\n    (c) the conduct contravenes the requirement.\n  Criminal penalty: 100 penalty units, or 2 years imprisonment, or both.\n    53B Obligation in relation to certain fees and charges\n    (1) Subject to subsection (5), a regulated person must not:\n    (a) in any case—give; or\n    (b) if paragraph 53A(1)(b) applies—engage in conduct that results in another regulated person giving;\n    the introducer under the flexible credit cost arrangement or an associated person any benefit, whether monetary or non-monetary, in relation to a credit contract or consumer lease if the following fees and charges exceed the specified fees and charges:\n    (c) in the case of a credit contract—credit fees and charges that are payable to the introducer, or an associated person, where the introducer or associated person is providing credit services in relation to the credit contract and is:\n    (i) providing the credit services as a representative of the credit provider for the credit contract; or\n    (ii) a linked supplier of the credit provider;\n    (d) in the case of a consumer lease—consumer lease fees and charges that are payable to the introducer, or an associated person, where the introducer or associated person is providing credit services in relation to the consumer lease and is:\n    (i) providing the credit services as a representative of the lessor under the lease; or\n    (ii) a linked supplier of the lessor.\n  Note: This would cover fees commonly described as “dealer origination fees” or “dealer administration fees” that enable the person providing credit services to recoup costs associated with providing those services.\n  Civil penalty: 2,000 penalty units.\n    (2) In this section, specified fees and charges means, in relation to a credit contract or consumer lease, the greater of $0 and the amount (if any) specified by a regulated person:\n    (a) before any determination, proposal or influence referred to in paragraph 53A(2)(d); and\n    (b) as the maximum amount of credit fees and charges or consumer lease fees and charges in respect of the credit contract or consumer lease that are of the type referred to in paragraph (1)(c) or (d).\n  (3) Subject to subsection (5), the regulated person must not determine the amount of the specified fees and charges by reference to the loss or potential loss of revenue to the introducer, or an associated person, resulting from section 53A affecting the manner in which a benefit is able to be determined.\n  Civil penalty: 2,000 penalty units.\n  (4) Subject to subsection (5), a regulated person must keep written records of the basis for determining any specified fees and charges specified by the regulated person for a period of 7 years.\n  Civil penalty: 2,000 penalty units.\n  (5) Subsections (1), (3) and (4) do not apply in relation to a benefit given by a regulated person to any of the following:\n  (a) a director or employee of the regulated person;\n  (b) a related body corporate of the regulated person;\n  (c) a director or employee of a related body corporate of the regulated person.\n  Offence\n  (6) A person commits an offence if:\n    (a) the person is subject to a requirement under subsection (1), (3) or (4); and\n    (b) the person engages in conduct; and\n    (c) the conduct contravenes the requirement.\n  Criminal penalty: 100 penalty units, or 2 years imprisonment, or both.”.\n\n  \n\nPart 3—Transitional\n\n6 Application\n\nThis instrument does not apply in relation to:\n\n(a) a credit activity that was engaged in before this instrument commences; or\n\n(b) a credit contract or a consumer lease that was entered into:\n\n(i) before this instrument commences; or\n\n(ii) before 1 February 2019 as a result of:\n\n(A) an offer that was made by the credit provider or lessor before this instrument commences; or\n\n(B) an acceptance by the credit provider or lessor before 1 February 2019 of an offer made by the consumer before this instrument commences.","sortOrder":1}],"analysis":{"flash_summary":{"complexity_score":6,"scope_assessment":{"changed":false,"description":"The instrument is narrowly focused on preventing benefits to introducers that are linked to APRs, rental charges, or certain fees, and on preventing regulated persons from offsetting that restriction by increasing other fees. The transitional provisions limit the instrument to forward-looking application. There is no sign in the text provided that this instrument substantially broadens scope beyond that stated purpose; it prescribes specific prohibitions, safe harbours and record-keeping rather than adding unrelated duties or extending coverage to additional product classes (home loans are explicitly excluded)."},"complexity_factors":["Multiple actors and relationships: licensees, exempt special purpose funding entities, servicers, introducers, associated persons (section 53A(1))","Two interlocking prohibitions with different triggers (benefits tied to APR/rental charge in 53A; benefits tied to fees/charges in 53B)","Safe harbour calculations with numeric floors and alternate calculation methods (200 basis points for APR, 4% for rental charge) (section 53A(3))","Cross-references to defined terms such as \"determines, proposes or influences\" which narrow or expand the trigger in contested ways (note to 53A(2))","Exemptions for related bodies corporate and employees that create routing and structuring options (53A(4), 53B(5))","Record-keeping obligation with a 7-year retention period and a prohibition on setting specified fees to offset lost revenue (53B(3)–(4))","Different penalty regimes (civil penalty 2,000 penalty units; criminal offence: 100 penalty units and/or 2 years imprisonment) and separate offense constructs for breach (53A(2)–(5), 53B(6))","Transitional carve-outs with date-based conditions (Part 3, clause 6), which complicate retrospective application and require timeline tracking","Potential for factual disputes about when an introducer influenced pricing, increasing evidentiary complexity for compliance and enforcement"],"plain_english_summary":"**What this instrument does (mechanics first)**\n\n- It stops certain payments or benefits being paid to people or businesses that introduce customers to a lender or lessor under a \"flexible credit cost arrangement\" for most consumer credit (not home loans) and most consumer leases. (See section 53A.)\n\n- It also limits fees and charges that can be paid to an introducer or related person for providing credit services (for example, dealer origination or administration fees), and requires a record of how any permissible maximum was set. (See section 53B.)\n\n- There are civil and criminal penalties for breaching the rules: a civil penalty of 2,000 penalty units for some contraventions, and an offence carrying up to 100 penalty units and/or 2 years imprisonment for others. (Sections 53A and 53B.)\n\n**Who is covered**\n\n- A \"regulated person\" who is a licensed credit provider or lessor that has entered a flexible credit cost arrangement for a credit contract (other than a home loan) or a consumer lease, or who is proposed to be the credit provider/lessor under such an arrangement. (Section 53A(1)(a).)\n\n- A licensed servicer and an \"exempt special purpose funding entity\" where the servicer has a servicing agreement and the exempt funding entity is (or will be) the credit provider/lessor and a flexible credit cost arrangement exists. (Section 53A(1)(b).)\n\n**Main prohibitions — in plain terms**\n\n- A regulated person must not give (and must not cause another regulated person to give) any benefit to the introducer (or an associated person) if:\n  - the benefit amount is determined by or varies with the consumer's annual percentage rate (APR) for credit, or with the rental charge above cash price for a consumer lease; and\n  - the introducer (or associated person) had a role in determining, proposing or influencing the APR or rental charge. (Section 53A(2).)\n\n- The same rule applies to benefits given in relation to certain fees or charges payable to an introducer when that introducer is providing credit services as a representative or linked supplier of the credit provider or lessor. If such fees exceed a previously specified maximum (set before any introducer influence), the benefit is not permitted. (Section 53B(1)–(2).)\n\n**Safe harbours / exceptions (how a regulated person can legally structure payments)**\n\n- A regulated person may pay a benefit that is tied to the APR or rental charge if the APR or rental charge is within a previously specified maximum (set before any introducer influence) and either:\n  - the APR is not lower than a \"base rate\" (the specified maximum minus 200 basis points), or else the benefit is calculated as if the APR were the base rate; or\n  - the rental charge is not lower than a \"base amount\" (specified rental charge minus 4 percentage points), or else the benefit is calculated as if the rental charge were the base amount. (Section 53A(3).)\n\n- For fees and charges (section 53B), the regulated person must not set the specified maximum by reference to the introducer's lost revenue caused by section 53A, and must keep written records of the basis for any specified maximum for 7 years. (Sections 53B(3)–(4).)\n\n**Who is explicitly excluded from the prohibitions**\n\n- Payments to a director or employee of the regulated person, or to a related body corporate (or its director or employee), are not caught by these rules. (Sections 53A(4), 53B(5).)\n\n**Transitional rule (what is not affected)**\n\n- The instrument does not apply to credit activity or contracts entered into before it commences. It also preserves some contracts entered into before 1 February 2019 that arose from offers or acceptances made before the start date. (Part 3, clause 6.)\n\n**Why the instrument matters (stated purpose and how the rules achieve it)**\n\n- The instrument prevents introducers who helped set or influence the APR or rental charge from being paid benefits that rise or fall with those cost measures (section 53A). Mechanically, this removes the direct financial link between a person who can influence price and the amount they are paid, unless the regulated person establishes a pre-existing maximum and either the price stays within a defined band or the benefit is calculated on a conservative (base) assumption. (Section 53A(3).)\n\n- The second part (section 53B) prevents lenders/lessors from dodging the effect of section 53A by increasing other fees payable to introducers. It also forces written justification for any maximum fees set, creating an audit trail (section 53B(4)).\n\n**Who pays and who decides**\n\n- The regulated person (licensee, and in some servicing structures an exempt special purpose funding entity) is the actor who must decide how to structure benefits, set any specified maxima (before any introducer influence), and keep records. (Sections 53A(1), 53A(3), 53B(2)–(4).)\n\n- Costs fall on regulated persons (compliance costs, possible reduction or restructuring of payments to introducers). Introducers and associated persons stand to lose benefit streams that were previously linked to APR/rental charges. Consumers are not required to take any action under these rules, but the regulated persons’ responses (fee re‑allocation, changes in product pricing or dealer commissions) may affect product prices or availability.\n\n**Immediate compliance levers and likely responses**\n\n- Regulated persons can preserve some payments by setting a specified maximum APR/rental charge or fee before any introducer influence and by using the base-rate calculation in section 53A(3). That creates an incentive to document and time the setting of maxima.\n\n- Alternatives introducers may seek: fixed fees not tied to APR/rental charge; payments for non-price services; or restructuring through related bodies corporate (which are excluded from the prohibition). The instrument explicitly excludes payments to related bodies corporate and employees (sections 53A(4), 53B(5)), so arrangements routed through those entities require careful legal review.\n\n**Compliance and enforcement risks**\n\n- Proving whether an introducer \"determined, proposed or influenced\" the APR or rental charge will be fact-specific and may be contested; the instrument’s note points to detailed definitions for those terms (section 53A(2) note). That raises evidentiary and enforcement complexity.\n\n- Record‑keeping obligations (7 years) and the requirement not to set specified fees to compensate for lost introducer revenue create documentary compliance burdens for regulated persons (sections 53B(3)–(4)).\n\n**Costs, trade-offs and opportunity costs**\n\n- Direct compliance costs: record-keeping, legal/advisory work to restructure commission or fee models, monitoring to ensure introducer influence did not occur before maxima were set.\n\n- Economic trade-offs: introducers paid by variable-price-linked commissions may lose income or push to alternate compensation models; regulated persons may raise other prices or reallocate costs to cover permitted fees.\n\n- Concentration of effects: the prohibitions most strongly affect introducers and the regulated persons who deal with them (concentrated benefits/losses), while consumers and the broader market bear diffuse effects via potential changes in pricing or availability.\n\n**Key sections to look at when implementing or reviewing compliance**\n\n- Scope of who is a regulated person and when 53A(1)(b) (servicer + exempt special purpose funding entity) applies.\n- The definitions of \"determines, proposes or influences\" (not reproduced here) referenced in the note to section 53A(2).\n- The safe‑harbour calculation rules in section 53A(3) (200 basis points for APR; 4% for rental charge), and the fee/record requirements in section 53B(2)–(4).\n- Transitional clause (Part 3, clause 6) to confirm which pre‑existing contracts are outside the instrument.\n\n"},"flash_summary_failed":{"failed":true,"reason":"A positive credit balance is required for all requests, including BYOK, so fallback providers remain available. Add credits at https://vercel.com/d?to=%2F%5Bteam%5D%2F%7E%2Fai%3Fmodal%3Dtop-up to continue.","source":"analysis-cron"},"kimi_summary":{"content_quality":"ok","complexity_score":6,"scope_assessment":{"changed":false,"description":"This is a targeted regulatory instrument addressing specific commission structures in point-of-sale credit. The scope remains tightly focused on flexible credit cost arrangements in motor vehicle and consumer goods financing, with clear exclusions for home loans and internal corporate arrangements. No evidence of scope creep beyond the original consumer protection intent."},"complexity_factors":["Nested conditional logic with multiple paragraph and sub-paragraph levels (e.g., 53A(2)(c)(i)(A))","Cross-references between sections 53A and 53B (e.g., 53B(2) references 53A(2)(d))","Dual regulatory structure applying to both licensees and exempt special purpose funding entities with different trigger conditions","Mathematical calculations required for exceptions (200 basis points, 4% thresholds, base rate calculations)","Multiple penalty regimes (civil penalty units vs criminal penalties with imprisonment)","Defined terms imported from external legislation (flexible credit cost arrangement, linked supplier, related body corporate) not defined within this instrument","Temporal conditions and transitional provisions with multiple cut-off dates (commencement date, 1 February 2019, offer/acceptance timing)"],"plain_english_summary":"This law stops hidden dealer kickbacks in car loans and consumer leases by banning commissions that rise with a borrower’s interest rate and by capping upfront dealer fees, with recordkeeping and penalties for breaches. It targets lenders, specialist finance entities, dealers and brokers who arrange such credit.\n\nIt matters because it removes the financial incentive for dealers to steer customers into pricier loans, strengthening consumer protection and attracting significant civil and criminal penalties for noncompliance."}},"importantCases":[],"_links":{"self":"/api/acts/asic-credit-flexible-credit-cost-arrangements-instrument-2017-780","history":"/api/acts/asic-credit-flexible-credit-cost-arrangements-instrument-2017-780/history","analysis":"/api/acts/asic-credit-flexible-credit-cost-arrangements-instrument-2017-780/analysis","conflicts":"/api/acts/asic-credit-flexible-credit-cost-arrangements-instrument-2017-780/conflicts","importantCases":"/api/acts/asic-credit-flexible-credit-cost-arrangements-instrument-2017-780/important-cases","documents":"/api/acts/asic-credit-flexible-credit-cost-arrangements-instrument-2017-780/documents"}}