Westpac had its first day in the slightly diffused spotlight at the Royal Commission into banking misconduct - this time moving into the murky world of car loans, with the paperwork originated in car yards.A murky world where Phillip Godkin, Westpac's general manager of its specialist finance business bank, told Commissioner Hayne that "talking specifically about the - the business of auto finance through dealer intermediaries, then we are typically number 1 or number 2." He also agreed with Albert Dinelli, counsel assisting, that the number of car loans on issue by Westpac by or through dealers in 2017 was "well into multiple hundreds of thousands … and the quantum of funds that's on loan in respect of car loans by Westpac or through dealers is similarly … in the multiple billions of dollars.Godkin was later forced to concede that although there is dependence by Westpac on the accuracy of the car yard business manager, car dealers generally can take advantage of a is a point of sale exemption from the National Credit Act, but that law still places obligations on Westpac.This was the subject of much questioning although the key items were the incentives Westpac pays dealers.Top of the list was "flex commissions", which are paid as a percentage of the margin that is achieved over a base rate that Westpac sets.Godkin conceded that until 2016 there was no upper limit.The next most important of the three incentives is tied to aggregate volumes over the course of a month -at the end of the month a dealer is paid "some amount which was based on the amount of business that they wrote over the course of that month", said Godkin.He agreed that the dealer has an interest in the margin being higher, and the customer is  not told about the variability of the margin.Dinelli then asked: "Is it right to say that one of the concerns about flex commissions is that the interest rate charged to the consumer is not related to their credit rating or risk of default, but to what they can negotiate with the dealer;  is that right?""That's fair," agreed Godkin. He did not agree that Westpac would be shutting down the arrangement any sooner than mandated by ASIC - set for November 2018."The issue in this market is, in terms of the way that we compete, is that it would be, in our view, impossible to stop it unilaterally without stepping away from the market altogether."As with CBA's unwillingness to be first mover to reform commissions paid to mortgage brokers, Westpac's response to an arrangement it knows is unfair is to continue until legally prevented.