The booming and “unchecked” buy now, pay later sector will be regulated amid calls to better protect consumers against its “growing dangers”.
Financial Services Minister Stephen Jones will on Monday announce changes to regulate lending schemes such as Afterpay in the same way as credit products.
They will be expected to have a credit licence, hardship requirements and minimum standards for conduct, the ABC reports.
There were 7 million active BNPL accounts in Australia in 2021-22 — valued at $16 billion — which was a 37 per cent increase on the previous financial year.
There have been growing calls to regulate the BNPL industry amid fears of its growing harm and potential for financial abuse of consumers.
But major players such as Afterpay had argued at a Senate inquiry into fintech under the Morrison government for a voluntary industry code instead.
Minister Jones will on Monday outline the changes in a speech to the Responsible Lending and Borrowing Conference.
The ABC reports he will say tougher regulation was needed because BLPL posed “growing dangers to consumers, which up until now have been largely unregulated and unchecked”.
“The plan will protect people from the spirals of harm that unregulated, unrestricted lending can cause,” he said.
“BNPL looks like credit, it acts like credit, it carries the risks of credit,” Mr Jones said.
