Catholic Social Services Australia has welcomed plans by the Albanese Government to tighten regulations around the “buy now, pay later” industry.
A Treasury discussion paper, released yesterday, says the relatively looser regulatory environment, together with the sector’s rapid growth, may be contributing to poor consumer outcomes, including 19 per cent of users cutting back or going without essentials to make payments on time.
Catholic Social Services Australia chair Francis Sullivan said BNPL plans can be a trap at any time of the year but for low-income families, in the lead up to Christmas, they be particularly dangerous.
“Everyone deserves to celebrate Christmas, but for low-income families, this can look very different to the more affluent in our communities,” Mr Sullivan said.
“The facts are that using BNPL companies to buy presents, food, and other Christmas related goods can often lead to a debt spiral that many low-income families struggle to get out of.”
The reforms proposed by the Government could see BNPL schemes face the same oversight as credit cards or loan products ensuring a balance between consumer protection and new buy now pay later products.
The Treasury discussion paper identifies three reform options:
Stronger self-regulation and affordability tests; partially bringing BNPL under the Credit Act, requiring providers to get an Australian credit licence and strengthen its industry code; and fully bringing the sector under the Act and make current responsible lending obligations applied to credit card providers also apply to BNPL.