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Car salesmen earning a 1 per cent to 3 per cent cut of the loan amount.

Ahyoo2002

By Ahyoo2002,
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Ahyoo2002

Ahyoo2002

2nd Gear

Nov 5, 2007

Motor traders being pressed to pay up CPF on commissions

 

By Christopher Tan

 

THE Central Provident Fund Board has widened its efforts to get motor firms to pay up CPF contributions on commissions earned by their salesmen.

The board told The Straits Times that it has written to about 40 major motor distributors - or just about the entire new car industry - to ask them to check their past records to see if they have missed out on paying contributions on third-party commissions.

 

The move follows a probe into two car agents started in August after the board received complaints from salesmen on the matter.

 

The complaints pertained to commissions that salesmen earn on car loans. Most dealerships sell cars packaged with a loan from a bank or finance house, with the salesmen earning a 1 per cent to 3 per cent cut of the loan amount.

Many car companies leave it off the books and allow the salesmen to be paid directly by the finance institutions. As such, they do not pay CPF for these commissions.

 

But it is no longer just car loan commissions that are being scrutinised. The CPF Board's audit covers commissions earned from other third-party services such as used car trade-ins, rust proofing, insurance and so on.

 

The board met the Motor Traders Association (MTA) early last week to explain the matter.

 

CPF Board spokesman Hazel Tan said: 'They understand the issue and are working with us to communicate with their members.'

 

MTA members met last Friday over the matter, which has caused a flurry in the market.

 

One member said: 'CPF's interpretation is too broad. Let us take the example of insurance. In the first year, there is no problem, but if the customer changes insurer the next year, how do we track?'

 

He said the MTA will seek another meeting with the CPF to nail down the definition.

 

'Moving forward, it is not a problem to comply with CPF's stand, but to make backdated payments is not so easy,' he said. 'The financial implication is huge.'

 

Banks and finance houses have given at least $35 billion worth of car loans since 1999, so the car industry may have to cough up more than $100 million in CPF dues, including penalties. And that is just for car loan commissions.

 

While motor traders said the issue of back payments is still a big unknown, it is clear the industry will have to change the way it conducts business.

 

Mr Glenn Tan, chief executive of Subaru agent MotorImage, said the company did not pay CPF on finance commissions in the past, but will do so now.

 

Mr Cheah Kim Teck, chief executive of multi-brand agent Jardine Cycle & Carriage's motor operations, said: 'We might have to ask all the finance companies to pay commissions through us.'

 

Like other motor traders, both CEOs said they are still looking at past records to see if they are liable for any back payments.

 

The CPF Board's Ms Tan said motor traders are not disputing the need to pay CPF on third-party commissions, and some had already started 'self-rectification'.

 

'Employers have been given up to middle of this month to complete the self-rectification,' she said.

 

Singapore Manual and Mercantile Workers' Union assistant secretary-general Wong Chip Mun said he is 'happy that the CPF Board is looking at this issue'.

 

The Straits Times learnt the CPF Board is auditing other industries on this matter as well. Other businesses with similar practices include the real estate and the financial services sectors.

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Haurus85

Haurus85

Neutral Newbie
How come SeePeeF running low when we have to wait till 85 to get our money?

 

They running out of money tat's y now we have to wait till 85. Haha.. [idea]

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Ahyoo2002

Ahyoo2002

2nd Gear
  • Author

I think at least more than 50% loan more than 50% of car price, so still a lot.

 

Salesman can earn from:

1) Commisions for selling new car

2) Trade in car

3) Insurance

4) Loan

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Melissa

Melissa

1st Gear

i dun think so.. i reckon its more on car buyer wants 100% loan...

Nowsadays, you see alot of youngsters driving on the roads.. its more of

'die die i want a car' mentality, thats why they want 100% loan n 0 Down payment.

I dun think salesman like 100% loan, cos this kind usually banks dun approve easily.

 

 

[flowerface][flowerface][flowerface]

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