The federal government will change the law so buy-now-pay-later (BNPL) products are regulated as credit products, like home loans.
The reason BNPL services are regulated differently is because, technically, they’re not a form of credit, as consumers are not charged interest.
However, as Minister for Financial Services Stephen Jones told the Responsible Lending & Borrowing Summit: “BNPL looks like credit, it acts like credit, it carries the risks of credit.”
“We have heard that some people are opening multiple BNPL accounts, to access far more debt than they’d be able to get on a credit card or a payday loan,” he said.
However, Minister Jones also said BNPL had done a lot of good for the economy, and provided a lot of benefit to both consumers and businesses.
As a result, he said the government’s legislation would be “a proportionate solution” that would allow consumers to continue enjoying BNPL while establishing “appropriate safeguards”.
The government plans to release exposure draft legislation later this year and introduce the final bill to parliament by the end of the year.
