Oz Buy Now Pay Later Sector Implements World First Industry Standards
Australia’s finance sector has become the first in the world to impose a code of practice on the booming buy now, pay later (BNPL) industry.
From today, BNPL providers such as Afterpay, Zip, and Klarna will have to adhere to the code developed by the Australian Finance Industry Association (AFIA), which includes provisions such as caps on late payment fees; compulsory financial checks on new customers before they are allowed to make purchases; and a ban on users under 18.
According to AFIA CEO Diane Tate, the code is designed to protect BNPL customers’ safety, with strengthening consumer protections a focus “from the get go”.
“The Code is explicitly consumer focused and has nine commitments that signatories make directly to the people that use their products and services.
“All Code Compliant BNPL providers conduct suitability assessments before a potential customer can make a purchase, and there will be additional checks to prevent customers extending themselves further, for instance, if they are showing signs of difficulty making repayments.
“On top of that, there are detailed commitments to help people that find themselves in financial hardship. And it is mandatory for all providers to be members of the external dispute resolution service – the Australian Financial Complaints Authority (AFCA),” she said.
Developed in conjunction with ASIC, the code was slammed by consumer groups during its draft consultation phase for being too vague; it has been updated to be more specific to the BNPL sector.