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Consumer advocates hit back at self-regulated BNPL code of practice
The long-awaited buy now, pay later code of practice is set to come into effect from 1 March, but industry experts remain sceptical of the self-enforced rules.

Consumer advocates hit back at self-regulated BNPL code of practice
The long-awaited buy now, pay later code of practice is set to come into effect from 1 March, but industry experts remain sceptical of the self-enforced rules.

The code that will govern the BNPL sector was drawn up by the Australian Finance Industry Association (AFIA) and a group of members in the BNPL space.
While final details are expected to be released later this week, a report surfacing in the Australian Financial Review hinted the code could bring in a requirement for credit checks for any transactions surpassing $2,000.
The code is expected to announce these credit checks will be done via the provider’s own system, with no requirements to use external data to ensure a consumer can pay back their bills.
The code is expected to prevent providers from offering BNPL products to minors, and will mandate anti-money laundering identity checks.
However, consumer industry groups, including CHOICE, Financial Rights Legal Centre, Financial Counselling Australia and Consumer Action Legal Centre have called for regulation of the sector to mirror that seen in the UK.
The British government said new laws would require buy now, pay later providers to conduct affordability checks before lending to customers, which may affect the product’s key attributes of convenience and simplicity.
While highlighting that self-enforced rules are a good first step, CHOICE’s director of campaigns and communications Erin Turner said any self-regulation of the BNPL will not be enough to fix the issues in relation to higher fees, inappropriate lending and pushing marketing.
“The buy now, pay later sector is now selling debt for dental treatments, solar panels and other large purchases. It is credit in everything but name, so the consumer protection laws for credit should apply in full, not a weak industry code,” Ms Turner said.
“The code will see businesses that fail to comply with basic standards face ‘naming and shaming’ rather than the penalties or legal action other lenders face for significant breaches of consumer credit protections. This sets an inappropriately low bar for a growing industry.”
CHOICE also pointed out that while BNPL does not charge interest, the late fees can be just as expensive as a credit card, and the retailer fees of 3 to 6 per cent are passed onto consumers.
They also highlighted research from ASIC, which found that one in five people had missed payments on their BNPL debt.
Worryingly, one in five people had also gone without essential items, such as food, in order to make a payment.
“BNPL providers run a mile at the mention of the word ‘credit’, telling their customers the service is all about better budgeting. What they tell retailers, however, is much closer to the truth – that BNPL encourages people to spend more,” Financial Counselling Australia chief executive Fiona Guthrie said.
“If it looks like a duck and quacks like a duck, it is a duck. We should ditch ideology and recognise that BNPL is credit and should be regulated like other credit. If we fail to act, more and more Australians will be harmed.”
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