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Afterpay And Zip Face Parliamentary Probe

The competitive and lucrative buy now, pay later market in Australia is set to face a parliamentary inquiry, as consumer risk remains unclear.

Afterpay and Zip were among those targeted in the ’Mobile Payment and Digital Wallet Financial Services’ report released yesterday, which found the industry is dangerously unregulated compared to other areas of the finance industry.

“The committee believes a parliamentary inquiry into this space is warranted early in the next parliament, starting not later than 18 months after the Code of Practice came into effect, to investigate issues related to consumer protections, the impact of BNPL services on other sectors, and fees and transparency related to the provision of BNPL products, among other issues,” the committee said.

The Code of Practice came into play this March.

Afterpay said in a statement, “We look forward to ongoing engagement with stakeholders to ensure that the Code remains relevant and fit-for-purpose.

“Since the BNPL Code came into effect, the BNPL industry has also become subject to the Design and Distribution Obligations, which ensure that consumers are being sold products which are suitable.

“Afterpay has strongly supported this new regime, as it is focused on delivering good customer outcomes – something that it has been dedicated to from the beginning.”

Both Labour and Liberal senators pushed against the committee’s recommendations.

“The evidence received by this committee does not support a further review of the BNPL sector. The BNPL sector has been scrutinised by numerous government agencies and Parliamentary committees since its emergence,” Liberal senator Andrew Bragg said.

“Industry self-regulation via the BNPL Industry Code of Practice has been a reasonable approach to date as the sector developed and matured,” the Labor committee members said in a statement.

“Industry self-regulation is unlikely to be appropriate forever, and there is a prima facie and growing case for fit-for-purpose regulation of the BNPL sector to entrench consumer protections, ensure credit providers are placed on a fair regulatory playing field, and promote competition and a reduction in fees.

“This should be the subject of a focused inquiry in the next term of parliament and it would have been preferable for the committee to say so directly.”

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