Australian Government to Regulate Buy Now, Pay Later Sector Amid Growing Concerns of Financial Abuse

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The booming and “out of control” buy now, pay later sector will be regulated amid calls to better protect consumers against their “rising dangers”.

Financial Services Minister Stephen Jones will announce changes on Monday to regulate lending schemes like Afterpay in the same way as credit products.

They are expected to have a credit license, hardship requirements and minimum standards of conduct, ABC reports.

There were 7 million active BNPL accounts in Australia in 2021-22, valued at $16 billion, which was an increase of 37 per cent over the previous fiscal 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 like Afterpay had argued in a Senate fintech inquiry under the Morrison administration for a voluntary industry code instead.

Minister Jones will outline the changes in a speech to the Responsible Lending and Lending Conference on Monday.

The ABC reports that it will say stricter regulation was needed because BLPL posed “increasing dangers to consumers, which have hitherto been largely unregulated and uncontrolled.”

“The plan will protect people from the spirals of damage that unregulated and restricted lending can cause,” he said.

“BNPL looks like credit, acts like credit, carries the risks of credit,” Jones said.