Treasury Options Paper, Regulating Buy Now Pay Later in Australia

Consumer Action joined with 22 other organisations including CHOICE as part of the “Close Lending Loopholes Alliance” to make a submission to Treasury on its Options Paper, Regulating Buy Now Pay Later in Australia.

The full submission is available here:

For the purpose of discussion for those interested in policy work, here’s a summary from the joint submission.


CHOICE’s nationally representative surveys conducted in June and in September 2022 found that a significant number of people are being sold into unaffordable BNPL debt:

  • 1 in 7 BNPL users were sold more than 20 BNPL loans in the past year
  • 1 in 5 BNPL users missed or had been late with a payment for a BNPL service
  • Of those users with late payments, 2 in 5 have taken out another loan to pay for BNPL fees or debts
  • 1 in 4 BNPL users used this credit product to pay for essential products or services

From the Treasury consultation paper, the proposed options:

Options for regulatory intervention
Informed by the regulatory issues identified by stakeholders, this paper puts forward for public consideration three broad options of varying levels of regulatory intervention:

Option 1: Strengthening the BNPL Industry Code plus an affordability test. This option will impose a bespoke affordability assessment for BNPL providers under the Credit Act and address any other regulatory gaps in a strengthened Industry Code to make it fit-for purpose.

Option 2: Limited BNPL regulation under the Credit Act. This approach would require BNPL providers to obtain and maintain an ACL, plus introduce modified Responsible Lending Obligations (RLOs) under the Credit Act to determine unsuitability, combined with a strengthened Industry Code.

Option 3: Regulation of BNPL under the Credit Act, with full RLOs. Under this option, BNPL providers would need to obtain and maintain an ACL. The existing RLOs in the Credit Act will be applied to all BNPL credit, including requirements around reasonable inquiries into a consumer’s financial situation and taking reasonable steps to verify this information.

Summary and answers to questions posed in the options paper

Can you provide examples of other areas of consumer harm or industry behaviour this paper has not discussed?

Drawn from our organisations’ extensive work with consumer using BNPL products, this submission provides further evidence of harm and industry behaviours in addition to those identified in the options paper. The additional areas of consumer harm identified in this submission include:

  • BNPL makes it harder for people to manage their money, disempowering those experiencing financial difficulties;
  • BNPL impacts upon First Nations communities in specific ways;
  • BNPL providers collect data well beyond what is needed, increasing risks of financial harm to consumers; and
  • Wage advance products and other poorly regulated forms of credit are leading to harms similar to BNPL.

Of the three options, which option do you think is most appropriate? Would you change any aspects of that option?

Consumer groups support Option 3 as most appropriate with a number of changes. BNPL providers are causing significant harm and full regulation of BNPL in line with Option 3 is the only way to effectively address those harms.

BNPL is credit and, as credit, it needs to be regulated in the same way as other credit products. BNPL must therefore be subject to the provisions of both the Credit Act, and the Credit Code. The reasons for this are to ensure:

  • Identical baseline protections for consumers of credit regardless of business model, with some nuances to reflect the particular risks of various products;
  • A level playing field for industry competitors;
  • Identical powers and tools for the regulator to effectively monitor the industry and enforce the law; and
  • A sufficiently robust regulatory framework to address all the harms currently being caused by BNPL.

There’s a lot more in the submission, including discussion of the other options and an extensive amount of case studies. It’s available as a PDF on the link above.


Has this poor regulatory framework affected us? It would seem so with the collapse of OpenPay. This may have left some retailers out of pocket, with goods taken but not reimbursement from OpenPay. Users of OpenPay will still need to pay off their debts, a sorry tale for all involved.

The collapse so sudden that many websites still have links to use it for payment. Bunnings have been quick to remove it from their web site as a payent option.

Screenshot 2023-02-07 152758


Another is pulling out of Australia.

Join the campaign calling on the government to apply the same consumer protections to buy now, pay later loans that apply to other forms of credit:


We compare how some other countries are regulating BNPL with our approach in Australia:


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