The new regulations and laws that were expected to regulate Buy Now, Pay Later (BNPL) providers have been delayed due to multiple resourcing pressures which were present on the federal government’s legislative drafting teams.
According to the article published by Financial Review, officials mentioned that the government is still aiming to bring BNPL under credit laws and restrictions, as well as to introduce proportionate responsible lending obligations on the popular short-term type of loans. It was also confirmed that the regulations will not hit an expected deadline in order to product draft legislations by the end of 2023.
The regulatory delay mean that New Zealand will be upfront Australia in the BNPL laws movement, as it is set to provide charges to its Consumer Finance Act already, through its parliament in order to lift obligations on providers and customers in the region, with a deadline set on the month of September 2024.
At the same time, the Albanese government initially flagged options and obligations to regulate multiple BNPL providers, such as Afterpay, Zip, or Humm, starting with November 2022. The preferred option was set on requiring providers to assets loans that are secure and efficient for clients, while also meeting their needs, preferences, and demands.
Laws to upgrade and improve payments system regulation and to regulate the overall crypto exchange procedures under the financial licensing regime were reportedly also competing for bandwidth, while Treasury resources were strained by the focus on scams, fraud, and online threads, as well as the fallout that followed the PwC tax leaks scandal.
The government is also set to consider whether BNPL operators should have the possibility to report loan and repayment data into credit bureaus, as part of a broader review of the credit reporting framework. In addition, it also plans for Buy Now, Pay Later to made credit reporting voluntary for non-bank providers as well. New Zealand already moved to make credit bureau reporting a requirement under its new BNPL regime, which allows banks to see whether clients are missing BNPL repayments and optimises the manner in which they asset credit risk for mortgages and credit card loans. According to the publication, Australian banks wish for BNPL to be brought under similar comprehensive credit reporting regime.
Australia’s proposed law is expected to impose fee caps on charges for the missed payments of individuals, as well as require new warnings and disclosures, alongside with requiring providers to check if the loans are suitable for customers of not. At the same time, it will ask players to have internal and external dispute resolutions, provide hardship provisions to struggling users, as well as introduce tougher rules on marketing.
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