Government to act on buy now, pay later (BNPL) sector
The Federal Government has confirmed that it will look to regulate the buy now pay later (BNPL) sector to bring it within the scope of consumer credit laws.
There is a voluntary BNPL Code of Practice (BNPL Code) in place but currently, there is no mandatory regulation of the sector.
Minister for Financial Services, Stephen Jones, announced this week that:
- BNPL products will be regulated under the National Consumer Credit Protection Act (NCCP Act) and not under separate legislation;
- the new regulation will be introduced by mid 2023; and
- the BNPL Code will be the starting point for the new regulation.
However, the critical issue is the extent of regulation beyond the scope of the BNPL Code.
The Minister said bringing BNPL products within the scope of the NCCP Act "doesn't mean that every single existing provision" would apply to the BNPL sector. He said while he did not want to stop BNPL products from continuing to be used by Australians as a good way of managing cash flow and their purchases from payday to payday, he wanted to ensure that "it's a safe product, and it's appropriately marketed and provided".
What to expect in the next few months
The next few months are likely to see significant lobbying by BNPL providers and others in the financial services industry and consumer representatives as the scope of this new regulation is formulated.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.