Buy now pay later facing fresh regulation from Attorney-General review
Already under pressure from proposed regulation, the BNPL sector must now factor in a review of credit reporting requirements by another federal body.
A new layer of uncertainty has been added to the proposed regulation of buy now, pay later products after the Attorney-General launched an overlapping review process alongside Treasury’s proposed legislative regime.
Released without fanfare in late April, the AG’s “Review of Australia’s Credit Reporting Framework” goes to a central issue of BNPL legislation: how and when should BNPL providers have to undertake credit checks and share data.
Submissions to the review are open until the end of May and banking sources argue tighter scrutiny of credit records is essential for all credit providers. However, those in the BNPL sector, already under immense pressure with their original business model, fear more onerous reporting requirements will kill off an innovative payment alternative.
Under Treasury’s draft regulation, released in March, BNPL products would operate under a new structure as low cost credit contracts (LCCCs). If the amount borrowed is under $2000 then a BNPL provider need only request “negative information” — where credit has been rejected or not repaid — from a credit reporting agency. If over $2000, more extensive information on other accounts and limits must be sought.
