Our first submission for the year gives feedback to the government on a new or future regulation to bring the Buy Now, Pay Later (BNPL) industry under the National Consumer Credit Protection Act 2009.

Currently, BNPL products aren’t regulated, or required to follow responsible lending standards, and do not need to hold an Australian Credit Licence.

Feedback from our network’s financial counsellors included concerns about the use of these services in domestic and family violence, particularly where coercive control or financial abuse is taking place, and elder abuse.

Our concerns also include inadequate dispute resolution or hardship processes, and the lack of customer support for consumers.

In one example, a financial counselling client came to a UnitingCare network financial counsellor to get support to negotiate with BNPL lenders as she was unable to meet her repayments. She had debts from five online BNPL operators, all with amounts less than $500. The loans had been taken out in succession, one after the other.

Her financial counsellor tried to contact and negotiate with the BNPL operators, but none of them responded to repeated contact attempts.

Financial counsellors in the UnitingCare Australia network report this is a common experience when trying to contact BNPL lenders on behalf of a client to seek a timely resolution on debts.

Despite attempts by the financial counsellor to contact BNPL providers and request that all communication be deferred to the counselling service, the BNPL companies continued to ignore the requests and to contact the client directly.

Continued direct contact with the client adversely affected both her mental health and her faith and confidence in her financial counsellor to support her to resolve the situation.

Without consumer protection under the credit laws of Australia, there is no requirement for a hardship program, nor any ability to negotiate repayment terms within the BNPL industry. BNPL operators currently don’t provide dispute resolution services, either.

We’re calling for the entire BNPL industry to meet the same requirements as any other financial institution, to give consumer protection to vulnerable clients, and safer ways to access financial products.

Read our submission online.