BNPL industry regulations will not be brought into law this calendar year as the government delays the process into 2024.
The drafting of regulations and laws surrounding the BNPL industry have been delayed to the New Year, reports the AFR. In November last year, the government revealed their intention to regulate the industry amid rising pressure from banks and regulatory bodies.
In May, the government proposed legislation that will require buy now, pay later organisations to conduct credit checks on customers as the services would be regulated as a consumer credit product.
“BNPL looks like credit, it acts like credit, it carries the risks of credit,” Financial Services Minister Stephen Jones said in May. “Our plan prevents lending to those who cannot afford it, without stopping safe, prudent BNPL use.”
The original proposal would see the legislation drafted by the end of this calendar year, however Financial Services Minister Stephen Jones has now confirmed the government would not hit the expected deadline to produce draft legislation this year.
Mr Jones said his objective now was to give long-term clarity early next year.
According to the proposal made in May, The Australian Securities and Investments Commission (ASIC) will regulate the BNPL sector. There will be requirements for the companies to employ internal and external dispute resolution, offer hardship provisions to struggling customers, and there will be tougher rules on marketing. This regulation requires buy now, pay later (BNPL) products meet modified Responsible Lending Obligations under the Credit Act to determine unsuitability, combined with a strengthened Industry Code.
Consumer Action chief executive Stephanie Tonkin fears this delay will lead to more consumers taking on debt they can’t handle over the Christmas period. “We are worried about another significant uptake in these products in the lead-up to Christmas,” she told AFR. “Responsible lending laws remain desperately needed to reduce the harm caused by buy now, pay later products.”
This news comes as another BNPL fintech startup collapses. BizPay, an Australian B2B BNPL lender has announced today it has fallen into voluntary administration. Fifteen staff are affected by the shutdown with all payments to business believed to be honoured.