Buy now pay later changes must go all the way, consumer groups say

Buy now pay later (BNPL) products must be fully regulated as credit to protect consumers and put all credit providers on a level playing field, a coalition of consumer groups has said.

The group, including CHOICE, financial counselling associations and consumer legal centres, has made the call as Treasury releases a consultation paper setting out regulatory options to rein in BNPL – a product which is causing considerable and growing consumer harm amid a burgeoning cost of living crisis.

Of the three options explored in the consultation paper, the only one that will adequately address the harm from BNPL is for it to be regulated in the same way as other credit products.

The other two options – beefing up the industry’s self-regulatory code with an affordability test or partly bringing BNPL into the credit code by introducing a sliding affordability test – would only see the problems continue.


“One of the insidious design aspects of buy now pay later is the use of direct debits which preferences repayments of credit over other essential expenses,” Mr Brody said. “The practice of providers denying service access to those that fall into arrears can also have perverse impacts, as people respond by prioritising repayments so they don’t get kicked off the app. What this means is that low default rates reported by some providers hides high levels of financial distress.

“Financial distress is just so clear in calls to financial counsellors at Consumer Action. Often we’re hearing from people with multiple accounts, with repayments coming out of their accounts at different times, meaning that they lose financial control. Buy-now-pay-later and wage advance services don’t help people budget, they make it harder”. 


Financial Counselling Australia CEO Fiona Guthrie said financial counsellors were seeing soaring numbers of people harmed by BNPL – proof that self-regulation by the sector was not working.

“Many of the people using BNPL are on low, and sometimes, precarious incomes. While the amounts people borrow may look small, the impact when the debt cannot be paid is not. People are having to forgo other essential items in order to pay their BNPL debts.”

“BNPL is credit, plain and simple, so it needs to be regulated in the same way as other credit products to provide people with adequate safeguards.”

BNPL providers are fintechs and of all businesses should already be well placed to take advantage of the opportunities provided by open banking. There is absolutely no excuse not to undertake adequate affordability checks as required by the credit laws.”


Mob Strong Debt Help Strategy Lead and Financial Counsellor, Bettina Cooper

“Buy now pay later has the impact of increasing the Gap on First Nations communities as it allows existing debts to be hidden by buy now pay later products. Greater oversight is needed to reduce harms that we are hearing on our Mob Strong Debt Help service including increasing reliance on it to cover essentials, groceries and energy.”

Acting Director of Casework, Jane Foley

“Buy now pay later is credit, and the law needs to capture this fact. Importantly, it needs to capture the proliferating models with every variation under the sun, whether it is a bill-paying product, wage-advance product, rent-paying product or wherever so-called ‘innovation’ leads us.”


“Australia has safe lending laws for a reason. Buy now pay later and other fringe lenders shouldn’t be allowed to evade important consumer protections by exploiting a loophole in the law.

“As many people struggle to pay their household bills, more are using buy now pay later to pay for essentials. Strong government action is needed now more than ever.

“We’re not asking for anything special – just that buy now, pay later plays by the same rules as everybody else that lends money to consumers, including the obligation to lend safely.”


“The debate about whether it’s credit is over. It is credit and must be regulated as other credit products are – without distinction. The new legislation must close the loopholes. We all know that unscrupulous providers thrive in the grey areas, so we can’t have any carve-outs. Payday lenders have to do responsible lending checks and they also lend small amounts. It is hard to argue that BNPL providers shouldn’t be held to the same standard.”


In May 2022, over 120 community groups signed an open letter calling on the new Government to regulate BNPL as conventional credit, with the same safe lending rules as other comparable forms of credit, following the groups’ experience of mounting cases of financial hardship fueled by BNPL.

In July 2022, consumer groups welcomed the new Government’s commitment to consult on how to best regulate BNPL.


For an interview with Fiona Guthrie at Financial Counselling Australia, contact Mike Bruce 0403 920 189

For an interview with CHOICE, contact 0430 172 669

For an interview with Financial Rights, email

For an interview with Gerard Brody at Consumer Action, contact Mark Pearce on 0413 299 567 or email

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