ACCC moves on commissions for car dealers

Australia's consumer watchdog is set to deny proposed changes to after-sales products peddled by car dealers.

The ACCC says it will deny authorisation to 16 insurance companies that proposed a 20 per cent cap on commission to car dealers who sell extended warranties, credit insurance and other financial products.

A fellow government body, the Australian Securities and Investment Commission, released a report in September 2016 that found "consumers are being sold expensive, poor value products... that provide consumers very little to no benefit" in a sales environment with "pressure selling, very high commissions and conflict of interest".

ASIC said at the time that the market needs to be "immediately and comprehensively addressed by insurers". Following that, 16 insurance companies banded together to cap commissions paid to car dealers who sell their products.

ACCC chair Rod Sims says they need to do more.

"The factors identified in ASIC's report mean that consumers are often unable to make optimal, well-informed choices when buying add-on insurance products when buying a car from a dealer," he says.

"A cap on commissions does not address these issues and will not remove the opportunity and incentive for insurers and dealerships to sell consumers expensive, poor value products."

The ACCC expects to release a final decision on the matter in March.

Read the full ACCC statement here.