Treasurer Josh Frydenberg’s announcement today that the Government intends to reform Australia’s payment systems is a real opportunity to improve consumer protection, according to Consumer Action Law Centre.
“Today’s announcement foreshadows consultation on regulatory arrangements for Buy Now Pay Later (BNPL) in 2022. This is an opportunity to ensure BNPL is regulated effectively and consistently with other credit products, to address the significant risk of debt and financial stress associated with these products”, said Gerard Brody, CEO of Consumer Action
Just this week, Financial Counselling Australia published research which revealed that 61 percent of surveyed financial counsellors said most or all their clients with BNPL are struggling to pay other living expenses.
“A further review of BNPL needs to be independent and led by appropriate experts, such as those that understand the risks caused by these credit products”, said Mr Brody.
The Treasurer’s announcement also proposes a licensing framework for cryptocurrency exchanges.
“There is no doubt that crypto exchanges need to be regulated more akin to banks—these entities are now holding significant sums of peoples’ money and investments, and there needs to be accountability
“However, it’s less clear how these changes will protect against scam losses. Scam losses through cryptocurrency platforms is a huge and growing problem.
“We’re falling behind international jurisdictions in terms of how we protect people from scams. A gap seems to be a lead regulator with responsibility for consumer protection and outcomes in the payment system”, said Mr Brody
The United Kingdom has a specialist payment systems regulator focused on consumer protection. It is implementing rules that make banks and payments providers more liable for scam losses, given that they are best placed to detect and prevent against scams.
“People who are scammed through no fault of their own should be entitled to a refund. This should be a central principle to payments system reform, if we are to have trust and confidence in new innovations”, said Mr Brody.