Consumer groups have welcomed the passing of the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024, also known as the BNPL Bill, through parliament.
The BNPL Bill will bring buy now, pay later services within the national credit laws, so that most consumer protections that apply to other credit products will also apply to buy now, pay later providers. Lenders like Afterpay, ZipPay, WalletWizard, BeforePay and more will need to abide by credit laws, providing greater protections to users, who, according to a survey by Financial Counselling Australia, have an average of three BNPL debts at any given time.
Domenique Meyrick, Co-CEO, Financial Counselling Australia said the Bill was a step in the right direction, but could still leave users with debt spirals that are difficult to get out of.
“Our sector has wanted buy now pay later products treated as credit since they were first introduced in Australia. Financial counsellors see the harm buy now pay later products can cause and these new laws will go a long way to protect consumers from getting into unnecessary debt,” she said.
“While we welcome this change, we are still concerned about what this will mean for accounts under two thousand dollars. Many people have multiple, small amount accounts and these are getting some into debt spirals.”
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Stephanie Tonkin, CEO at the Consumer Action Law Centre agreed, highlighting the cost of living pressures driving more Australians to reply on buy now, pay later schemes to afford the essentials.
“There are compromises in the laws, so we will be monitoring the impacts on consumers to understand how effective these new guardrails will be in stopping the people we help falling into unaffordable debt spirals. The proof will soon become clear in the coming months and years,” she said.
“Regulating BNPL products couldn't be more important in a cost of living crisis. We observe BNPL being used to afford essentials like food, and easy access to multiple BNPL accounts has intensified the 'money juggle' for the many families that we help.”
Chief Executive of consumer advocacy group, CHOICE, Ashley de Silva, said regulation had been years in the making.
“The new laws will greatly reduce the risk of people being signed up to unaffordable BNPL loans that leave them worse off. It also ensures customers can take disputes with BNPL providers to the financial complaints body and have their complaint fairly heard,” he said.
Regulation could also provide avenues for new lending schemes, without needing to pass new laws every time a new credit provider began operating. Karen Cox, Chief Executive of the Financial Rights Legal Centre said calls were already coming in from new lenders.
“[The laws] will be flexible enough to address other developing credit models like wage advance that we are hearing more and more on our phone lines without major legislative change being required,” she said.
“The important guardrails that these laws introduce will go a long way to reigning in some of the unaffordable lending practices that we have seen and will help people spread their expenses without getting into problematic debt.”
The National Debt Helpline is available on weekdays from 9:30am to 4:30pm on 1800 007 007, with live chat available from 9am to 8pm at www.ndh.org.au.
Good Shepherd offer financial assistance and referral services, their number in New South Wales is (02) 4396 1555.
In emergencies, Lifeline is available 24/7 at 13 11 14.
