BackAustralian Authorities to Crack Down on Buy Now, Pay Later Providers
The move to regulate the buy now, pay later industry comes after the Treasury in November published a consultation paper
PremiumSYDNEY—Buy now, pay later providers in Australia will face new regulations, including needing to hold a credit license, as part of the government’s moves to clamp down on the sector.
Australia’s Minister for Financial Services Stephen Jones on Monday announced that BNPL companies would have to meet dispute resolution and hardship requirements, minimum standards of conduct, and abide by existing restrictions on unacceptable marketing.
“Our plan maintains the benefits of BNPL that many Australians enjoy, and we must ensure that providers will have appropriate safeguards in place, and we must ensure that they operate honestly, efficiently, and fairly, in line with other regulated credit products," he told the Responsible Lending and Borrowing Summit in Sydney.
The move to regulate the BNPL industry comes after the Treasury in November published a consultation paper which sought feedback on how the sector should be regulated. It offered three broad options, including one where providers are subject to the same regulation as other credit products, such as credit cards.
The plan announced by authorities on Monday was option number two, which also detailed that providers must comply with statutory product disclosure and other information obligations, as well as Responsible Lending Obligations.
The Australian Securities and Investments Commission will be given “strong enforcement powers," under the plan, Jones said, while the industry will also be consulted on the details, he added.
“Our plan prevents lending to those who cannot afford it, without stopping safe, prudent BNPL use," Jones said.
Australian BNPL operator Zip welcomed the government’s reforms, and said they are a “sensible balance" between protecting customers, prompting competition and providing confidence to the industry.
Zip Chief Operating Officer Peter Graysaid that the impact of the changes on the company would be very minimal.
“We have been advocating for fit-for-purpose regulation. We do currently hold an Australian Credit License already. We do conduct ID, credit and affordability checks on our customers, so we do really have a very good understanding of their financial circumstances prior to offering them any of our services," he said in an television interview on the Australian Broadcasting Corporation.
The government said it would issue draft legislation for consultation later this year and planned to introduce the bill into Parliament by the end of the year.
Write to Alice Uribe at alice.uribe@wsj.com
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