New safeguards likely to stop consumers driving themselves deeper into buy-now debt
Buy now pay later customers are likely to be subject to credit checks to stop consumers getting themselves into financial hot water with the popular payment schemes.
Financial Services Minister Stephen Jones flagged the changes on Monday, saying guardrails were needed to ensure customers didnāt rack up debts they werenāt able to pay back.
The government is inviting submissions into three changes recommended by Treasury as the number of buy now pay later accounts in Australia from providers such as Afterpay, Zip and Klarna swell past seven million.
The options include a new āaffordability testā and bringing the services under the umbrella of the national consumer credit act either partially or completely.
Jones told Nineās Today program the minimum changes would include putting in place credit checks to ensure products were affordable and suitable for people taking out loans.
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āWe donāt want to see people in the same situation they were in the bad old days of credit cards ā¦ they might have had five, six, seven or eight credit cards,ā he said.
āNo one company knew the other one had one, and this person was just simply unable to pay off their debts and they were in a dire credit downward spiral.ā
Jones said changes should be finalised within a one-year window.
āA lot of people have got not one, not two, but three or four buy now pay later accounts and it appears there is a small percentage of the market where people are getting into hot water,ā he said.
āWe want to ensure that this product is operating safely where itās being marketed, where itās being pitched to consumers, itās operating within the normal guardrails that operate with other credit products.ā
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