CCLSWA was pleased to contribute to the Close Lending Loopholes Coalition joint submission on the Treasury options paper Regulating Buy Now, Pay Later in Australia.
Treasury has proposed three options for regulating BNPL:

• Option 1: Strengthening the BNPL Industry Code plus an affordability test
• Option 2: Limited BNPL regulation under the Credit Act, including leasing and scalable unsuitability test
• Option 3: Regulation of BNPL under the Credit Act

Consumer advocates consider that continued industry self-regulation would fail to protect consumers from the potential harm they face. It was submitted that no other form of credit is allowed to wholly self-regulate.

BNPL providers have continued to sign people up to arrangements that they cannot afford to pay, even after the introduction of the industry Code.
The submission supports ‘Option 3’, which would see BNPL fully regulated under the National Consumer Credit Protection Act 2009 and the National Credit Code (the Credit Act). The submission also recommends that the regulation goes further to impose additional protections under the Credit Act to better protect vulnerable consumers.

Consumer advocates consider that Option 3 is the only way to ensure that people sold BNPL products have access to essential consumer protections. BNPL providers will still be free to operate but crucially will be prevented from selling people into unaffordable debt and the regulator will have a consistent regulatory regime upon which to monitor and oversee the credit market.

To read a copy of the joint submissions, click here.