The Australian government has announced its decision to regulate the buy now, pay later (BNPL) industry, treating it as credit products. The regulation aims to address concerns regarding unaffordable lending, dispute resolution, excessive fees, poor disclosure practices, and unsolicited credit increases. BNPL providers will be required to hold Australian credit licenses, comply with hardship and resolution requirements, and meet minimum conduct standards. The government plans to release draft legislation for industry consultation later in the year, with the final bill expected to be introduced by the end of 2023.
Facts
- The Australian government will regulate the BNPL industry, treating it as credit products.
- The decision was announced by financial services minister Stephen Jones at the Responsible Borrowing and Lending Summit in Sydney.
- The decision was made following an extensive consultation process initiated late last year.
- Concerns raised in the review include unaffordable lending, concentrated among low-income borrowers, as well as issues with dispute resolution, excessive fees, poor disclosure practices, problematic marketing practices, and unsolicited credit increases.
- BNPL providers will be regulated under the Credit Act and will need to obtain Australian credit licenses, adhere to statutory hardship and resolution requirements, and comply with minimum standards of conduct.
- The government plans to release draft legislation for industry consultation later this year and aims to introduce the final bill in parliament by the end of 2023.
- Concerns about BNPL include excessive debt accumulation, potential abuse of BNPL products in abusive relationships, missed essential payments, and indicators of financial stress among consumers.
