12DMCCaps on commissions for add‑on risk products supplied in connection with motor vehicles

#### 12DMC Caps on commissions for add‑on risk products supplied in connection with motor vehicles Commissions not to exceed determined caps (1) A person contravenes this subsection if: (a) the person provides a commission to another person, or receives a commission from another person, in connection with the supply (by any person to any person) of a financial service; and (b) the financial service is the provision of an add‑on risk product to a person (the product recipient) in connection with: (i) the sale or long‑term lease of a motor vehicle to the product recipient; or (ii) the provision of credit connected with the sale or long‑term lease of a motor vehicle to the product recipient; or (iii) the provision of a warranty by the product recipient in connection with the sale or long‑term lease of a motor vehicle to another person by the product recipient; and (c) the person acquiring the motor vehicle does so as a consumer (within the meaning of the Australian Consumer Law); and (d) providing the add‑on risk product is covered by a determination under subsection (3); and (e) the value of the commission exceeds the cap that applies, under that determination, to providing the add‑on risk product. > Note: For the value of the commission, see subsections (5) to (7). Meaning of add‑on risk product (2) An add‑on risk product is a financial product that is a facility through which, or through the acquisition of which, a person manages financial risk (within the meaning of subsection 12BAA(5)). ASIC may determine caps (3) ASIC may, by legislative instrument, determine a cap on the value of commissions provided in connection with an add‑on risk product of a kind specified in the instrument. (4) Without limiting subsection (5), the determination may do either or both of the following: (a) limit the circumstances in which provision of an add‑on risk product of that kind is covered by the determination; (b) provide for the way in which the value of commissions is to be ascertained for the purposes of the determination. Valuing commissions (5) The value of a commission provided in connection with an add‑on risk product is: (a) the value ascertained in accordance with the determination under subsection (3) that covers the provision of the add‑on risk product; or (b) if the determination does not provide for the way in which the value is to be ascertained—the sum of: (i) to the extent that the commission is expressed as an amount of money—that amount; and (ii) otherwise—the market value of so much of the commission as is not expressed as an amount of money. (6) In working out the market value of something for the purposes of subparagraph (5)(b)(ii) disregard anything that would prevent or restrict its conversion to money. (7) If a commission is provided in connection with 2 or more add‑on risk products, apportion the value of the commission between the add‑on risk products: (a) in accordance with the determination under subsection (3) that covers the provision of the add‑on risk products; or (b) if the determination does not provide for such apportionment—on a reasonable basis. Multiple commissions (8) For the purposes of this Act, if more than one commission is provided (by one or more persons to one or more persons) in connection with the add‑on risk product, subsection (1) applies as if: (a) one single commission is provided that comprises all of those commissions; and (b) if those commissions are provided by more than one person—that single commission is jointly provided by all of those persons; and (c) the value of that single commission is the sum of the values of all of those commissions. Commissions for consumer credit insurance (9) This section does not affect the application of section 145 of the National Credit Code to a commission paid in connection with consumer credit insurance (within the meaning of the National Credit Code) unless the insurance: (a) is an add‑on risk product of a kind covered by a determination under subsection (3); and (b) is provided in connection with: (i) the sale or long‑term lease of a motor vehicle; or (ii) the provision of credit connected with the sale or long‑term lease of a motor vehicle. > Note: In the absence of an applicable determination under subsection (3), section 145 of the National Credit Code imposes a 20% cap on commissions provided in connection with consumer credit insurance.