There’s an absence of regulation on buy now, pay later services. But that may change soon. Read more:
Under the new rules, the popular service will be treated more like other credit products.
"For example, there's no point advertising for an interest-free product, when they're just going to slam you with pretty much double the amount for a late fee anyway, even if you're trying to communicate with these companies and make arrangements."The flagged changes have attracted the support of major players Afterpay and Zip, as well as the peak body for Australia's fintech industry.
Afterpay said in a statement that it welcomed progress on the reform options for "a fit-for-purpose" system that "provides certainty for industry, while Peter Gray, the co-found of Zip, said he anticipates there will be "very minimal" impact to the business as the company has already adopted measures like credit checks.
Reforms for the buy now, pay later industry are necessary because the opportunities it has brought business have come with "new and growing dangers to consumers", Financial Services Minister Stephen Jones said.Karen Cox, CEO of the Financial Rights Legal Centre, said it is important that strong enough safeguards are put in place on credit checks and obligations to ensure consumers aren't accruing debt well beyond their means to repay.
Kristen Hartnett, the national manager of Salvation Army's Moneycare financial counselling service, said she welcomed moves to provide regulation to a sector that has been up until now unregulated - and she urged those in financial distress to seek help.
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