Coppo Report APT yesterday (Thursday)
Aftepay{12.96 0.47 3.76%} BUY
- many in the market are totally confused by the “regulation risk” that the shorters use as their number 1 reason for shorting. I saw one broker saying "stay away from Afterpay - they have a Senate Inquiry " ...
- A few weeks ago a “Senate inquiry” has been announced, reviewing a number of areas not covered by the recent banking Royal Commission. This includes payday lenders, consumer lease providers, and unlicensed financial services providers including “Buy Now, Pay later” providers and short term credit providers.
The inquiry is, to assess the impact ofthese services, and to determine whether current regulation ofthese providers meets community standards andwhether reform is needed. It is to reportby 22 Feb 2019.
Those who have followed Senate Inquiries (whichdo not have the powers of a Royal Commission) havesaid that the reality is that they are greattheater but little if anything comes out of them.
It is the ASIC review that does matter - not theSenate inquiry.
Now the big issue that is causing all theuncertainty is that the Buy Now, Pay Later sector is notcovered by any regulation or ASIC & until there is theworries (for some) will remain as to what comes out.
It should be stressed that Afterpay havebeen in contact with ASIC for over 18 months & Afterpayhave been saying for a long time that they are happy for ASICto be given powers to intervene.
If ASIC had any real issues then –as they have in the past with other products – voiced their opinion – but inthis case they have not raised any concerns.
Oka bit has happened recently that many will NOT be aware of
- As we know Afterpay has been working with regulators, the government and the opposition to work through our regulatory status. I thought it may be helpful to give you some further, up to date insight.
- Now we know that ASIC supports the view of a light touch regulatory model where companies like Afterpay would be caught by a new intervention power.
- The power would allow ASIC to intervene in the market if they believe there was a risk of significant detriment to the consumer.
- We believe this is a sensible solution that would see Afterpay come under a regulatory scheme without being included in the National Credit Code. The Government in New Zealand has come to a similar conclusion.
ALP& Coalition actually both support Afterpay
- All sides of politics in Australia have been willing to engage and want to see Afterpay succeed, but many don’t realize this - as the last big focus came from a Fairfax publication that implied that the ALP & Senate were going after Afterpay.
- This could not be further from the truth ..
OK
- If we remember about 2 weeks ago Afterpay was smashed -19% from $14 to $11.25 after the SMH headline mentioned Afterpay first (to get noticed I assume) & specifically revealed Afterpay in the same sentence as “debt vultures”…
- The article came out at 3.45pm (just 25 mins before mkt closed) but quite incredibly (as most journos would ) they had not even asked Afterpay (or anyone else) that they mentioned, for a comment ???@!!!
- Investors had no time to react - the headline looked dire - the article looked really bad & thus many investors panicked & a few said to me (more so retail) that the article looked so bad & an ALP backed Senate Inquiry - who seem out to get Afterpay - is also coming - they simply had to sell & could not risk what would happen the next day - when this "terrible" was more widespread..
- Well stock recovered the next day in response to Afterpay’s comments at the time
BUT
Asa reminder this is what the SMH’s 3.45pm article that triggered the -18% plungein APT said … (it is worth reading it again)
- “Afterpay, payday lenders and 'debt vultures' to face Senate inquiry” & then pointed out that “Payday lenders, debt management firms and Afterpay will be the subject of a new Senate inquiry into parts of the finance sector that have escaped the scrutiny of the Hayne royal commission. After a year of scandal for the country's biggest financial institutions, Labor has proposed the new inquiry into parts of the financial world that are often slammed by consumer advocates, and are either unregulated or subject to much less regulation than banks. The Greens, independent Derryn Hinch and Centre Alliance senators Rex Patrick and Stirling Griff threw their weight behind the inquiry on Wednesday, guaranteeing it would have the votes to pass the Senate. “Buy now, pay later schemes such as Afterpay- which consumer groups say exploits a loophole in lending laws - would also be put under the microscope
- Shadow financial services spokeswoman, Clare O'Neil, said the Opposition wanted to stop people entering a "spiral of debt" from expensive payday loans,and the inquiry would look at the financial counselling sector's capacity to service this part of the community.
- “I have been speaking with Australians around the country who are victims of misconduct by financial service providers," Ms O'Neil said.
Okso following on from that - many were very worried that it sounded likeALP''s Ms O'Neil was going after Afterpay…
BUTsince then a lot has happened & you really need to know this hashappened...
- In what (if anyone had bothered to report it) is some very positive news
- I see that that the Shadow Financial Services Minister Ms O'Neil has actually taken up Afterpay’s arguments in the parliament and supported their regulatory model, see below:
ClareO’Neil – Shadow Financial Services Minister said recently .. read it yourself& make up your own mind if she is really going after Afterpay !??
Clare O’Neil – Shadow Financial Services Minister..
- ASIC's proposals also included the emerging buy now, pay later sector in the scope of the bill, and it's a great opportunity for the parliament to ensure that ASIC doesn't have to keep playing catch-up with new players in financial services.
- ASIC has asked for buy now, pay later providers to be included, and it's pretty clear from media reports last week that a leading buy now, pay later provider, Afterpay, has actually agreed that it should be brought within the scope of this bill.
- So we have a situation where one of the providers of financial services who are out there trying to do something new, using a bit of technology in the way that they're going about their business,is actually saying to government, 'We want you to regulate us in this way.'
- And yet the government has designed a bill that specifically carves them out—specifically excludes them.
- Afterpay also told Fairfax newspapers that extending the bill to cover buy now, pay later providers would 'afford customers an additional layer of protection without compromising our business model'.
- They said that they want to come under the regulator's product intervention powers, as it would 'promote higher levels of consumer trust in newer services such as ours.
'https://parlinfo.aph.gov.au/parlInfo/download/chamber/hansardr/4fa4c3cb-5541-4547-98c1-81b998c56718/toc_pdf/House%20of%20Representatives_2018_10_24_6630.pdf;fileType=application/pdf
