I know a lots of sentiments (and money) are on the line including mine. but I want to understand why everyone was confident about the announcement. To me it looked liked buy now pay later got based by ASIC. I read a lots of comments earlier and everyone seems to be positive, I just want to understand where am I getting this all wrong.
For all of our sakes, I have highlighted some points directly from ASIC website if anyone is interested in discussing (not bashing
).
https://download.asic.gov.au/media/4947835/rep600-published-28-11-2018.pdf
18-357MR ASICputs spotlight on the rapidly growing buy now pay later industry
ASIC has released its first review ofthe rapidly growing buy now pay later industry. The review of this diverse andevolving market has found that buy now pay later arrangements are influencingthe spending habits of consumers, especially younger consumers.
A buy now pay later arrangementallows consumers to purchase and obtain goods and services immediately but payfor that purchase over time. While some buy now pay later providers offer fixedterm contracts up to 56 days for amounts up to $2,000, other providers offer aline of credit for amounts up to $30,000.
ASIC found that the number ofconsumers who have used buy now pay later has increased five-fold from 400,000to 2 million over the financial years 2015-2016 to 2017-2018. The number oftransactions has increased from about 50,000 during the month of April 2016 to1.9 million in June 2018. At 30 June 2018, there was $903m in outstanding buynow pay later balances.
ASIC Commissioner Danielle Press said'Although our review found many consumers enjoy using buy now pay laterarrangements and plan to continue using them, there are some potential risksfor consumers in using these products.
'The typical buy now pay laterconsumer is young with 60% of buy now pay later users aged between 18 to 34years old. We found that buy now pay later arrangements can cause someconsumers to become financially overcommitted and liable to paying late fees.'
Onein six users had either become overdrawn, delayed bill payments or borrowedadditional money because of a buy now pay later arrangement. Most consumers believe that these arrangementsallow them to buy more expensive items than they would otherwise and spend morethan they normally would. Providersalso use behavioural techniques which can influence consumers to make apurchase without careful consideration of the costs.
‘The exponential growth in thisindustry, along with the risks we have identified, means this will remain anarea of ongoing focus for ASIC. One area we will be targeting is whereconsumers are paying more than they need to for using a buy now pay laterarrangement’, said Ms Press.
Giventhe potential risks to consumers, ASIC supports extending the proposed productintervention powers to all credit facilities regulated under the ASIC Act. Product intervention powers will provide ASIC witha flexible tool kit to address emerging products and services such as buy nowpay later arrangements. This will ensure ASIC can take appropriate action wheresignificant consumer detriment is identified.
Finding 8: Buy now pay later providers included potentially unfair termsin their contracts with consumers 64 Buy now pay later providers are prohibitedfrom including terms in their standard form contracts with consumers that are‘unfair’.
Note: See Div 2 of Pt 2 Subdiv BAof the ASIC Act. REPORT 600: Review of buy now pay later arrangements ©Australian Securities and Investments Commission November 2018 Page 15 65 In our view, each buy now paylater provider in our review included some terms in their standard contractsthat are potentially unfair to consumers. This includes terms that: (a) gave the buy now pay later provider a very broad unilateral discretion to vary the contract; (b) provided a very broad range of circumstances in which a consumer will be regarded to be in ‘default’ on their arrangement;
(c) limited and excluded theliability of provider for goods or services supplied by the merchant;
(d) held the consumer liable forunauthorised transactions, even when the provider knows or suspects thetransaction may be unauthorised; and
(e) very broadly indemnified theprovider against losses, costs, liabilities and expenses.
66 We have raised our concernswith each provider in our review to highlight terms in their consumer contractsthat are potentially unfair, and we will continue to keep all regulatoryoptions open to address these concerns. Each provider is reviewing theircontracts to amend or remove unfair terms.
67 All providers must ensure thattheir standard form contracts do not contain contract terms that are potentiallyunfair.
