As anticipated, the new Commonwealth Government has indicated there will be regulation of the Buy Now Pay Later ('BNPL') industry. In an announcement made last week, the new financial services minister, Stephen Jones, telegraphed the much anticipated and expected news.
We don't know yet what that regulation will look like.
What we do know is that:
- the regulation process will be complete within 12 months, by June 2023;
- Buy Now Pay Later products will be regulated, probably under the terms of the National Consumer Credit Protection Act 2009; and
- it may not simply be a matter of changing the definition of "Credit" in that Act, and the method of regulation may look a lot like the current voluntary code.
There is suggestion that Buy Now Pay Later services will not be as strictly regulated as consumer credit, but few details are available.
While do not know precisely what the regulatory scheme will look like, the Financial Services Minister has indicated that the voluntary Buy Now Pay Later Code is a good starting point, and we expect that will be a minimum requirement in the regulatory scheme moving forward.
For more information on the Code, click through to our March 2022 article: 'Buy Now Pay Later (BNPL) Update: How to Seek and Keep Code Compliance Accreditation'.
Regulation of Buy Now Pay Later comes at a time when there is significant disruption in the market, and many participants are suffering loss of value and failure to meeting shareholder expectations.
The future viability of By Now Pay Later products remains uncertain and challenging.
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