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The regulator has issued new guidelines for BNPL providers, urging them to secure a credit licence.
The Australian Securities & Investments Commission (ASIC) has laid out new guidance to buy now, pay later (BNPL) providers in a move to better regulate the industry and protect customers.
The published guide aims to help BNPL providers understand their obligations ahead of new laws coming into effect on 10 June 2025.
The ASIC guidance makes clear that providers of credit under a low-cost credit contract or BNPL contract must hold an Australian credit licence and comply with the relevant licensing obligations.
It also outlines how the regime for low-cost credit contracts applies and what BNPL providers must do to comply with the lending obligations.
From 10 June, BNPL contracts will be regulated as a type of credit under the Credit Act (although some obligations differ for BNPL contracts that meet the definition of a low-cost credit contract. For example, providers of low-cost credit contracts will be able to elect to comply with modified responsible lending obligations.)
The regime for BNPL and low-cost credit contracts is designed to maintain the “unique benefits of these contracts while reducing consumer harm”, ASIC said.
ASIC commissioner Alan Kirkland said: “These reforms are an important step to improve protection for Australian consumers who use BNPL products.
“We strongly encourage buy now pay later providers who do not already have the appropriate credit licence to apply for one as soon as possible.
“Providers who do not have their credit licence application accepted for lodgement by ASIC by 10 June 2025 may be engaging in unlicensed conduct if they continue to operate.”
The rapid rise of BNPL, coupled with a lack of robust regulation, has sparked concerns about the potential negative impacts on both businesses and consumers.
The government has responded with stronger regulations, which have drawn praise from the broking industry.
BNPL concerns will endure
The latest guidance by ASIC comes after research from the Australian Financial Complaints Authority (AFCA) for the financial year ending June 2024 found that a rise in complaints related to financial hardship was a “significant issue of concern”.
“Complaints in this area were up 18 per cent over the past year, with a substantial portion relating to home loans,” AFCA’s report said.
“Many complaints were about failures by lenders to properly respond to, or adequately address, hardship requests. This was more pronounced among smaller lenders and BNPL providers.”
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