Regulation of Buy Now, Pay Later a step closer, but concerns remain over details
Consumer groups respond to draft Buy Now, Pay Later legislation (BNPL) released today.
Quotes attributable to Karen Cox, CEO of Financial Rights Legal Centre
“ Today is a positive day for Australian consumers with the Government proposing draft legislation to treat Buy Now, Pay Later as what it really is - credit. Removing this regulatory loophole and capturing Buy Now, Pay Later under the Credit Act will go a long way towards bringing these products within acceptable guardrails - helping people spread their expenses without getting into problematic debt.”
“We also welcome the fact that the proposed laws are flexible enough to capture current and developing credit models like wage advance that we are hearing more and more on our phone lines. Some of the details may need fine-tuning, but getting all providers within the same regulatory regime is a big step forward. ”
Quotes attributable to Domenique Meyrick, Co-CEO of Financial Counselling Australia (FCA)
“FCA welcomes this draft legislation. It’s a common sense approach that finally treats BNPL as a credit product. Financial counsellors see the harm BNPL causes to many people and these changes will make it significantly safer for all consumers, including the most vulnerable.”
“Under this draft, BNPL providers will have to check if a client can actually afford the repayments before opening up an account by asking what their income is and by doing a credit check.”
“The one area we are looking at closely is what this will mean for accounts under two thousand dollars. Financial counsellors see clients with multiple, small amount accounts and these are getting some people into debt spirals.”
Quotes attributable to Stephanie Tonkin, CEO of Consumer Action Law Centre
“We welcome regulating Buy Now, Pay Later and future unregulated products as credit because every day we are speaking to people who have been harmed by these products. Buy Now, Pay Later is being used by people in financial difficulty to afford essentials like food and medicine. The lack of regulation means many people calling our financial counsellors take out multiple accounts in times of difficulty and become trapped in unaffordable debt spirals when repayments fall due.”
“The proposed laws are complicated and seem stacked against a consumer exercising their rights, which might not result in a reduction of harm we hoped to see from regulation.”
Quotes attributable to Tom Abourizk, Head of Policy at CHOICE
“We welcome the Government’s consultation on draft legislation to regulate BNPL as credit, however the proposed framework does not appear to require BNPL providers to verify income, catering too much for fast credit approvals over accurate ones.”
Sign the petition to close lending loopholes here: www.choice.com.au/CloseLendingLoopholes
Media contact: Jim Hook, 0430 172 669, media@choice.com.au
