Financial Services Minister Stephen Jones has confirmed that credit checks are set to be made mandatory in the buy no pay later sector.
“At a minimum, putting in place some sort of credit checks to make sure the product is affordable and suitable for the people it is being pitched at,” Jones told Seven News on Monday, when asked what options were being floated.
“We don’t want to see people in the same situation they were in the bad old days of the credit card and other parts of the credit market, where they might have had five, six, seven or eight credit cards, and no one company knew the other had one and this person was simply unable to pay off their debts and they were in a credit downward spiral.
“We want innovation, we want people to have access to these great products but we want to ensure that there’s proper guardrails in place.”
Jones said the government is currently collecting bad-use studies.
“We’ve heard stories about people saying, ‘This is a great innovation, it enables me to use my phone like a credit card.’,” Jones continued.
“But therein lies the trap. It is not a credit card. It’s operating outside the normal credit laws and a lot of people are getting into hot water.
“A lot of people have got not one, not two, but three or four buy-now-pay-later accounts and it appears that there is a small percentage of the market where people are getting into hot water.
“We want to ensure that this product is operating safely – safely, where it’s being marketed, where it’s being pitched at consumers, it is operating within the normal guardrails of other products.”
