Definitions
AFCA means the Australian Financial Complaints Authority.
AFIA means Australian Finance Industry Association Limited ACN 000 493 907.
AFIA Insurance Premium Funding Group (or ‘the Group’) means the AFIA Insurance Premium Funding Group that has been established under the terms of the By-Laws.
Amount of Insurance Premium Funded means the amount of the loan that funds the Insurance Premium and may be less than the Loan Amount.
Annual Percentage Rate is the rate that can be used to calculate the cost of the loan taking account of the reducing balance of the Loan Amount, expressed as an annual rate. For the purposes of calculating the Annual Percentage Rate, the cost of the loan is exclusive of fees.
Application Fee means any Fees charged by the lender which is in relation to the application for the Insurance Premium Funding Product.
ASIC means the Australian Securities and Investments Commission.
Average Monthly Payment is the Total Repayment Amount divided by the Term. The Average Monthly Payment amount does not include fees and other charges you can avoid, such as interest at a default interest rate on overdue amounts, Late Payment Fees and Dishonour Fees.
Board means the board of directors of AFIA from time to time, acting as a board.
Business Day means a day which is not a Saturday, Sunday or a public or bank holiday in the place where the relevant act is to be performed.
By-Laws means the AFIA Insurance Premium Funding Code of Practice By-Laws, as approved by the Board, or as amended from time to time.
CCC means the Code Compliance Committee described in clause 2.3.
Code Compliant Member means an AFIA Member that has been approved as a Code Compliant Member of the AFIA Insurance Premium Funding Group under the terms of the By-Laws.
Commission is a payment made by a lender to an Intermediary in connection with an Insurance Premium Funding Product which may be a fixed percentage of the amount funded, and which is transparent and disclosable. A Commission will not be a variable percentage linked to increased volume. The Commission may be for the Intermediary's relevant transaction-related costs and/or quality assurance requirements (such as acting in the interests of the customer, improving business systems, undertaking training and maintaining adequate competency, improving quality and compliance of services, and maintaining adequate insurance) of which will be based on a calculation of genuine and relevant amounts.
Conflicted Remuneration means the following types of remuneration in connection with an Insurance Premium Funding Product:
| Conflicted Remuneration | Definition |
|---|---|
| Access and Exclusive Arrangement | Payment of a calculated amount, provision of a Soft Dollar Benefit or a structural advantage that is put in place (for fees or without fees) which unfairly promotes or favours an entity and/or limits the business activities of others and/or restricts or prevents an entity dealing with others. |
| Advanced Remuneration | Remuneration that is paid in advance to the Intermediary prior to the Intermediary providing the service. |
| Profitability / Income Share Arrangements | Payment of a calculated amount of remuneration based on a profitability hurdle or income share. For the avoidance of doubt, this does not prevent an ownership structure, joint venture and/or capital arrangement and payment between entities where the arrangement does not result in an Access and Exclusive Arrangement and the nature and interest of the arrangement is disclosed to the market by us. However, any such funding arrangements should be on commercial and arms-length terms. |
| Soft Dollar Benefit | All non-monetary remuneration that is provided by a lender to an Intermediary, Intermediary Group (Broker Group) or Authorised Representative Network, or similar, that is attributable to the distribution, referral or marketing of an Insurance Premium Funding Product and that such non-monetary remuneration is not otherwise excluded by law. A soft dollar benefit (such as, entertainment or gifts) should be reasonable in the circumstances and/or comprise benefits of less than $300 or an alternative threshold permitted for any 12-month period, providing identical or similar benefits are not given on a frequent or regular basis, such as numerous smaller benefits. All parties should retain a register for giving and receiving soft dollar benefits over $300 or an alternative threshold as already contained in corporate policies (or multiple smaller amounts the sum of which is greater than $300 or the alternative threshold within a 12-month period). Discretion should be exercised consistently with corporate expense delegations with regards to entertainment (such as, lunch meetings). |
| Over-ride Intermediary Remuneration | Extra remuneration paid by a lender on top of Commission or Service Fees. |
| Volume Based Incentive (VBI) | A volume-based incentive is one where access to the incentive, or the value of the incentive, is dependent on the total number or value of Insurance Premium Funding Products that are recommended by our Representatives, Intermediary, Intermediary Group (Broker Group) and/or Authorised Representative Network |
Constitution means the Constitution of AFIA as amended from time to time.
Direct Debit Fee means the fee (if any) charged by the lender to a borrower for requesting the drawdown of funds from the borrower's nominated account, where the request is made under an authority granted by a Direct Debit Request.
Dishonour Fee means the fee charged by the lender where you fail to pay an amount that is due and payable to the lender under the Insurance Premium Funding Product contract. Early Repayment means the early repayment of the contract amount, as well as the payment of all amounts that you are required to pay under the Insurance Premium Funding Product contract.
Early Repayment means the early repayment of the loan amount, as well as the payment of all amounts that you are required to pay under the Insurance Premium Funding Product contract.
Fees means all fees payable, or that may become payable, by you to the lender under the Insurance Premium Funding Product contract.
Industry means that section of the loan market in which the Code Compliant Members are participants as lenders to consumer and business customers under any Insurance Premium Funding Products.
Insurance Premium means the amount to be paid for a contract for insurance.
Insurance Premium Funding Product means a loan which has a Term and where:
a. the finance is provided (or to be provided) for a purpose that is wholly or predominantly to fund Insurance Premiums; and
b. the finance provided (or to be provided) is:
- unsecured (with or without a guarantee), or
- secured by any form of security that is not a mortgage over land in registrable form.
Interest Expense means the interest charge, or charge for the cost of credit, that is payable by you under the Insurance Premium Funding Product contract. The Interest Expense does not include any allowance for Fees that are separately payable under the Insurance Premium Funding Product contract.
Intermediary means an AFSL holder or a corporate authorised representative of an AFSL holder involved in the execution of a transaction relating to the Insurance Premium Funding Product but excludes any Intermediary Group (Broker Group) and/or Authorised Representative Network. The meaning can also include licensees and insurance brokers.
Intermediary Group (Broker Group) and/or Authorised Representative Network means a parent company, with subsidiaries, members, affiliated companies, corporate authorised representatives, or a company which is an AFSL holder and is part of a larger multinational broker group, with proprietary systems or dedicated insurance premium funding teams to provide services to a lender.
Intermediary Remuneration means the commission payment made to an Intermediary in connection with the Insurance Premium Funding Product and which is related to the distribution, referral or marketing of the Insurance Premium Funding Product by that Intermediary. It also encompasses remuneration to a Representative.
Late Payment Fee is a fee charged by the lender where an amount due and payable under the Insurance Premium Funding Product contract has not been received by the lender within the required time for the payment of that amount.
Loan Amount is the total amount of the finance made available, or to be made available, under the Insurance Premium Funding Product contract.
Multi-year Agreement means an agreement between a lender and an Intermediary, an Intermediary Group (Broker Group) and/or Authorised Representative Network.
Other Fees means a fee that will be charged by the lender to a borrower under the Insurance Premium Funding Product contract that is not an Application Fee or Interest Expense and that is not contingent on the occurrence of any later event.
Representatives means our staff, agents and representatives.
Service Fee is a payment that relates to an exchange of value for agreed services between entities, such as a lender and an Intermediary Group (Broker Group) and/or Authorised Representative Network in connection with an insurance premium funding product. This payment may relate to the genuine reimbursement of relevant costs otherwise associated with the distribution, referral or marketing of the Insurance Premium Funding Product (such as administration, accounting, payments processing, data management, training, marketing, and information technology software or support).
A Service Fee should be a fixed amount and should not be adjusted to include any volume-based incentives (such as, an increasing percentage or additional dollar payment based on the number of Insurance Premium Funding Product contracts originated). A Service Fee should be paid on an agreed schedule (such as, monthly, quarterly or yearly) and in arrears. Where a Service Fee is paid, it must be commercial in nature. When a Service Fee is paid, it will be disclosed to the customer by us.
Term is the period expressed as a number of months (including any part of a month) over which the Total Repayment Amount is to be paid by you to the lender.
Total Cost of Credit is the total amount paid by a customer in Interest Expenses, Application Fees, Intermediary Remuneration and Other Fees for the Insurance Premium Funding Product. The amount does not include fees and other charges that are capable of being avoided, such as default interest charges arising from overdue amounts, Late Payment Fees and/or Dishonour Fees.
Total Interest Percentage is the Interest Expense expressed as a percentage of the Loan Amount (and may also be referred to as a ‘flat rate’ or ‘flat interest rate’).
Total Repayment Amount is the total amount that is to be paid to the lender, comprising the Loan Amount and the Total Cost of Credit.