The Australian Government is to introduce new rules that will treat buy now, pay later schemes as credit products in an effort to mitigate mounting consumer debt.
Unveiling the reforms, Assistant Treasurer Stephen Jones, says: “Evidence suggests that those risks are disproportionately affecting women, First Nations communities and people on low incomes. We have heard that some people are opening multiple BNPL accounts, to access far more debt than they’d be able to get on a credit card or a payday loan."
The new rules will also act to counter other problematic areas, such as excessive fees, poor disclosure practices, problematic marketing practices and unsolicited credit increases
The reforms will require BNPL providers to hold Australian credit licences, comply with responsible lending obligations, meet statutory dispute resolution and hardship requirements, comply with statutory product disclosure and other information obligations, and abide by existing restrictions on unacceptable marketing.
Trade body Fintech Australia welcomed the proposals. "Measured regulation is crucial in ensuring trust in Australia’s fintech industry, which is essential for its growth,” says general manager Rehan D'Almeida. “This framework strikes a balance, designing a scalable and technology-neutral framework that embeds strong and effective consumer protections."