![]() The current industry code has been criticised by consumer groups because is not law and is not enforceable, and any buy now pay later player that fails to comply with its obligations does not face penalties. "This approach would require buy now pay later providers to obtain and maintain an ACL, plus introduce modified Responsible Lending Obligations (RLOs) under the Credit Act to determine unsuitability, combined with a strengthened Industry Code," the paper said.Īnd the least stringent option suggested is to strengthen the current industry code, which is currently self-regulated, but to add in an "affordability test" that would try to help determine whether a customer is able to service the debt. The Treasury paper also notes that "poor product disclosure practices and a lack of warning requirements means consumers do not have sufficient information to make informed choices".Īnd that "unsolicited selling and advertising practices" targeting consumers encourage the use of buy now pay later for essentials such as groceries and utilities.Ī less stringent option would be to have limited regulation of buy now pay later players under the Credit Act. It notes a survey of consumers carried out by corporate watchdog, The Australian Securities and Investment Commission (ASIC) earlier this year, that found 19 per cent of buy now pay later consumers surveyed cut back or went without essentials to make repayments on time.Īnother ASIC report based on a detailed look into the industry last year, found that one in five consumers are missing payments. It also raises other issues including "excessive" and "disproportionate" fees and charges being imposed relative to the size of the consumer's debt. ![]() ![]() It said, "frictionless sign-up to buy now pay later products enhances other consumer harms, such as scamming, overselling, and financial abuse".
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