The Federal Government has [finally] declared Buy Now Pay Later products as credit products and has outlined a path to regulation in the months ahead, recognizing that the products can harm customers.
Big players like CBA pushed the Government into a more gentle regime than I think is idea,, but at least its a step in the right direction. But two questions, will BNPL appear on credit files, and what about those thousands of customers of these products who are already in over the heads. We note from our surveys significant growth in use of these products as inflation and interest rate rises bite.
This is too little too late!
http://www.martinnorth.com/
Digital Finance Analytics (DFA) Blog
The Regulation Of “Duck Quacking” Buy Now Pay Later Loans! [Podcast]
The Federal Government has [finally] declared Buy Now Pay Later products as credit products and has outlined a path to regulation in the months ahead, recognizing that the products can harm customers.
Big players like CBA pushed the Government into a more gentle regime than I think is idea,, but at least its a step in the right direction. But two questions, will BNPL appear on credit files, and what about those thousands of customers of these products who are already in over the heads. We note from our surveys significant growth in use of these products as inflation and interest rate rises bite.
This is too little too late!
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The current Treasury review of Buy Now Pay Later lending highlights the contentions around the issue. Those with existing Credit Licenses of course argue that BNPL providers should also play on the same level playing field.
Many under financial stress are reaching for BNPL and some are ending up paying high effective interest rates. APRA changes also shape the game.
The sector does need proper regulation. Will the Government cave or stick?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
An estimated 7 million “buy now pay later” users will soon see new laws introduced by the federal government that aims to better protect them against financial abuse.
A new Treasury paper released by Financial Service Minister Stephen Jones today suggests buy now pay later players could soon be subject to the same laws as credit card providers, as “unaffordable or inappropriate lending practices are contributing to financial stress and hardship, and other types of consumer harm”.
The paper said there were 7 million active buy now pay later accounts in the 2021-22 financial year resulting in $16 billion in transactions, an increase of almost 37 per cent on the previous financial year.
The Treasury paper makes it clear self-regulation, without some controls, is no longer an option.
It raises a range of issues, noting there’s been reports of “poor complaints handling processes” and that “the lack of hardship assistance for consumers leads to delayed or unsatisfactory remediation”.
Go to the Walk The World Universe at https://walktheworld.com.au/
APRA has released updated guidelines on how banks should count Buy Now Pay Later and HECS debt when assessing mortgage repayments. Weirdly banks seem to not have been doing this routinely.
Research from the UK shows one in ten users of Buy Now Pay Later end up with contact from debt collectors, while in the UK and NZ, BNPL are deemed as credit products. But in Australia, we are pursuing a different and more relaxed path, despite the high volume of late payment fees, despite the harm.
Go to the Walk The World Universe at https://walktheworld.com.au/
Research from the UK shows one in ten users of Buy Now Pay Later end up with contact from debt collectors, while in the UK and NZ, BNPL are deemed as credit products. But in Australia, we are pursuing a different and more relaxed path, despite the high volume of late payment fees, despite the harm.
Go to the Walk The World Universe at https://walktheworld.com.au/
