Senate Inquiry Submissions

Submissions are in for Afterpay and ASIC. Very positive look to things as product intervention power extension appears to be their only goal and not full credit RLO regime! 

https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Creditfinancialservices/Submissions

ASIC excerpts: 

ASIC currently has limited jurisdiction to address potential risks to consumers when they use buy now pay later arrangements.The popularity of these arrangements is growing rapidly, but the National Credit Act and National Credit Code were not drafted with these arrangements in mind.Overview62 Buy now pay later arrangements are a form of credit used to buy goods and services that have become widespread very quickly. Our data shows that about 2 million consumers have used a buy now pay later arrangement within the last 12 months.63 Buy now pay later arrangements allow consumers to pay for a purchase by instalments without incurring any upfront charges (such as fees or interest). As there is no upfront charge to the consumer, these products are not regulated by the National Credit Act.64 The provider of the arrangement earns their revenue froma) a payment by the merchant (as they can increase the volume of sales from these arrangements); and(b) default or late fees where the consumer fails to make payments as agreed under the buy now pay later contract.65 Because the responsible lending laws do not apply to these arrangements, buy now pay later providers are not required to consider the income and existing debts of a consumer when they decide whether to provide a loan. This means thata) buy now pay later providers can offer loans to consumers when they are unlikely to be able to afford the payments (e.g. because they have a low income and substantial existing debts); and(b) a consumer who is in default with one buy now pay later provider can still access credit with that or another provider.66 While each buy now pay later provider takes steps to refuse some credit applications, these steps can vary widely between each provider. 67 One of the largest buy now pay later providers, Afterpay, supports extending the proposed product intervention powers to these products. In a submission to the Inquiry by the Senate Economics Committee, it stated:Afterpay supports extending ASIC’s intervention powers as it will further increase public confidence in our product and ensure additional consumer protection is provided in the case that our product is used in an unintended manner. (Submission to the Senate Standing Committee on Economics, p. 1.)68 ASIC is currently conducting a detailed review of the buy now pay later industry and expects to publish a report by the end of 2018. 70 As a base level of protection, we consider that ASIC’s proposed product intervention power should include all credit regulated under the ASIC Act, so that we can act quickly to address any significant consumer detriment to consumers from these arrangements.71 We consider that this would provide an appropriate level of regulation in this market that balances the following factorsa) it would allow ASIC to respond quickly and effectively to address the causes of significant consumer detriment when they arise;(b) it would minimise regulatory cost; and(c) it would therefore foster consumer trust and confidence in buy now pay later arrangements, especially during this period of substantial growth.