Buy Now, Pay Later – release of exposure draft legislation

Australian Treasury

The Albanese Government is opening consultation on draft legislation to regulate Buy Now, Pay Later (BNPL) products in Australia.

The government is committed to a financial system that leads to good consumer outcomes with appropriate safeguards in place.

The emergence of BNPL products has created new opportunities in the Australian economy. The Australian Finance Industry Association has estimated that BNPL adds as much as $18.4 billion to GDP and supports more than 120,000 jobs.

At the same time, BNPL isn’t subject to the regulatory framework that applies to other credit products. This can lead to poor product disclosure, inadequate dispute resolution processes, excessive default fees and unaffordable lending practices that lead to hardship and financial stress.

That’s why the government is taking action to regulate BNPL. The draft legislation released today amends the law to bring BNPL into line with other types of credit. This will ensure Australians can continue to enjoy the benefits of BNPL while receiving appropriate protections.

Under the proposed reforms, BNPL providers will be required to hold an Australian Credit Licence. They will have to comply with existing requirements under the Credit Act, including in relation to product disclosure, dispute resolution and hardship assistance.

BNPL providers will also be required to take steps to make sure they are lending responsibly. This requirement will operate in a way that is flexible, adaptable and proportionate to the risk of consumer harm.

Exposure draft legislation and explanatory materials can be found on the Treasury website. Submissions will remain open until 9 April 2024. Interested parties are encouraged to share their feedback, which will shape the development of a final bill for introduction to Parliament later this year.

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