Question 1

What are ‘Flex Commission’ arrangements?

Accepted Answer

‘Flex Commission’ arrangements were a common form of commission in the car finance industry to remunerate and incentivise car dealers and brokers.

In simple terms, the practice of Flex Commissions led to unknowing customers paying unfairly high and in some cases exhorbitant rates of interest, irrespective of their personal financial circumstances or credit risk.

The practice was banned in November 2018.

Question 2

How do ‘Flex Commission’ arrangements work?

Accepted Answer

Generally, flex commissions worked in the following way:

the bank or finance company would set a base rate of interest, which was the minimum interest rate to be charged to the consumer;

the car dealer was then able to negotiate with the consumer for an interest rate over and above the minimum base rate. The interest rate negotiated by the car dealer was not dependent upon a consumer’s credit risk, but, amongst other things, their ability to negotiate in their own best interests; and

the difference between the finance company’s minimum base rate and the interest rate ultimately charged to the consumer was known as the ‘flex amount’. The flex commission payable to the car dealer was based on the flex amount and was generally shared between the finance company and the motor dealer.

Question 3

How have Flex Commissions impacted car loan customers?

Accepted Answer

It has been reported that interest rates charged to car loan customers has varied between 6.5% and 15.5% in respect of the same model vehicle of similar value being sold on the same day.

In dollar terms, the difference in the commission earned on the sale of these loans was $315 and $10,823 respectively.

It is alleged that Flex Commission practice took advantage of consumers’ ignorance of the commission structures in place between the finance company and the car dealership. Through research, the practice has been shown to have a higher incidence of younger consumers and those on lower incomes.

Question 4

How much will it cost me to participate in the class action?

Accepted Answer

It will cost you nothing.

Shine Lawyers expects to engage a litigation funder to pay the legal costs and disbursements of running the class action, who will in turn charge a commission from the proceeds of any settlement or judgment and will also meet an adverse costs order if required.

Question 5

How much can I expect to recover?

Accepted Answer

At this stage of the class action, it is not possible to estimate a specific figure that each customer can expect to receive.

The exact methodology used to assess any loss has not yet been determined, however it is anticipated that losses including the difference between the relevant bank/finance company’s base rate and the interest rate ultimately charged to the consumer will be pursued, as well as any applicable additional losses.

Question 6

How do class actions work?

Accepted Answer

There are three criteria that need to be fulfilled for a class action to take place:

There must be 7 or more people claiming;

The claims must arise out of the same, similar, or related circumstances; and

The claim must relate to at least one common issue of law or fact.

Class actions in Australia work on an opt-out model.  This means that all potential claimants become group members of the action whether they intend to participate or not.  These group members are bound by the judgment of the court or settlement unless they opt-out.  The group members in a class action are usually notified about the class action by order of the Court.

Due to the size of each individual claim, the costs of running this action as an individual would quickly exceed the potential damages recoverable.  As each group member’s claim involves many common questions of fact and law, running this action as a class reduces the average cost of litigation to a client by only addressing the common issues once at trial, instead of multiple times.

Question 7

How long will the class action take to resolve?

Accepted Answer

Due to the nature of class actions, the first stage of the proceedings can take between twelve months to three years or more from its commencement.

Unless a settlement is reached, the first stage will only resolve the representative’s claims and the common issues of the proceedings, with group member claims to be resolved individually at a second stage of the proceedings.

Question 8

Will my contact details be kept private?

Accepted Answer

Shine Lawyers will only use and/or disclose your personal information strictly for the purpose of the investigation and subsequent legal proceedings, or as required by the Court or by law.  In all other cases, we will seek your consent before disclosing any of your personal information.

Question 9

Who are Shine Lawyers?

Accepted Answer

Shine Lawyers Pty Ltd was founded 42 years ago in Queensland and listed on the Australian Stock Exchange in 2013.  As one of Australia’s largest litigation law firms, Shine is comprised of a hardworking, straight talking team of people who have the clout to take on Australia’s biggest cases.

This class action is being led by Vicky Antzoulatos, Practice Leader - NSW Class Actions.  Vicky has over 20 years’ experience running large and complex multiparty legal disputes including class actions, in Australia.

Send an email to flexcommissions@shine.com.au to find out more.

About Us

Car Dealer Flex Commission Class Action

What is the Car Dealer Flex Commission Class Action about?

What are 'Flex Commissions' and how do they work?

Can I join the class action?

How do I sign up?

Who is Shine Lawyers' Class Action team?

Common Questions