The Australian financial regulatory body, ASIC, has initiated a consultation process to announce new rules for the buy now, pay later (BNPL) sector, which will take effect in June 2025. The forthcoming regulations aim to preserve the advantages of BNPL agreements while enhancing consumer protection mechanisms across the country.
To facilitate industry understanding and compliance, a draft Regulatory Guide (Draft RG 000) and a related Consultation Paper (CP 382) have been released. These documents invite feedback from stakeholders and the wider industry regarding the revised regulatory framework governing low-cost credit contracts.
Beginning June 2025, it will be mandatory for BNPL providers to possess a credit license and adhere to the obligations set forth in the National Consumer Credit Protection Act of 2009. Notably, specific responsibilities will be imposed on those BNPL agreements characterized as low-cost credit contracts.
The purpose of Draft RG 000 is to delineate the primary responsibilities of providers offering low-cost credit contracts. It includes guidance on complying with adjusted responsible lending obligations and the protocols for making information available electronically.
Feedback on the proposed guidelines can be submitted to ASIC via email by March 7, 2025, giving relevant entities an opportunity to voice their perspectives on the consultation paper.
The new regulations stem from the Treasury Laws Amendment Act of 2024, which modifies the existing National Consumer Credit Act to encompass BNPL agreements within the National Credit Code. This legislative amendment enters into force six months post-Royal Assent, set for June 10, 2025, unless an earlier date is proclaimed.
Under the new regulatory framework, obligations may vary for BNPL contracts classified as low-cost credit contracts. Providers in this category will have the option to adhere to modified responsible lending requirements.
In January 2025, ASIC published Information Sheet 285, clarifying the credit licensing obligations applicable to entities participating in credit activities concerning BNPL contracts.
Overall, with these significant changes on the horizon, stakeholders in the BNPL sector are encouraged to engage with the consultation process to ensure the successful implementation of these new guidelines, fostering both compliance and consumer protection in Australia’s financial landscape.