Another win for BNPL as competition tribunal backs flexigroup

  • By Christine St Anne

flexigroup is well positioned in the growing alternative energy market as the Australian Competition Tribunal greenlighted the use of buy now, pay later (BNPL) in the payment of new energy products. 

The decision could pave the way for BNPL to emerge as the preferred option in paying for green energy.

“RFi Group data shows that 3 percent of personal loans were taken out for environmentally friendly products such as solar panels or energy efficient products, and these borrowers have a higher personal income compared to the total market," RFi Group client insights manager Anna Shaw said. 

“While this percentage is small, it does show there is appetite to borrow money for new energy technologies, particularly for a more affluent customer,” Shaw said.

“As Australians become more concerned about climate change, particularly following the recent bushfires, interest in environmentally friendly products could increase and having a range of financing options will be important in driving uptake,: 

RFi Group data also shows that personal loan holders who took out a loan for an environmentally friendly product are more likely than other borrowers to have considered an alternative finance product, with 1 in 5 having considered buy now pay later for their loan”.  

The Australian Competition Tribunal’s decision was reached in a determination following an application filed by flexigroup regarding the role of BNPL in new technology. 

The application was in response to the ACCC’s position that wanted to ban sellers in solar energy from offering BNPL. 

Furthermore, the ACCC wanted to ensure responsible lending checks in line with the New Energy Tech Consumer Code. 

In its determination, The Australian Competition Tribunal recognised 'buy now pay later' as a “significant and popular form of finance used by consumers to acquire new energy technology products”.

The Tribunal added that the data it examined indicated that “arrears and defaults are significantly lower for all types of finance extended in the new energy sector compared to other sectors”, this was, according to the Tribunal, due to the nature of the product – which generates savings and the demographics of the consumer – older home-owners.

The Tribunal has also stopped short of calling for a code of conduct in the new energy sector, as it “considers that most of the proposed restrictions on the supply of ‘buy now pay later’ finance in the proposed code will generate substantial public detriments by reducing the availability of such finance to consumers, thereby reducing consumer access to NET [new energy technology] products”.

The organisation did note that  “ASIC has been actively considering” whether the National Consumer Credit laws should be extended to cover BNPL, adding that “ASIC’s review of the sector will have more evidence before it to consider whether such an extension is warranted”. 

arrears and defaults are significantly lower for all types of finance extended in the new energy sector compared to other sectors, Australian Competition Tribunal 

A recent review by a senate committee did not see scope for regulation in the sector, advocating for self-regulation as innovations like BNPL would not suit a “one-size-fits-all approach”. 

The Tribunal’s decision has not surprisingly been welcomed by BNPL businesses. 

Australian fintech Brighte said that the decision was a “huge win today for Australian consumers” adding that “BNPL is loved by Australians for high value purchases such as solar and batteries – over 10 per cent of Australian residential solar installations have used BNPL to pay for their purchase”.

Brighte  said that the determination also “puts an end to the uncertainty and confusion and confirms the legitimacy and consumer benefit of BNPL for solar and new energy”. 

Flexigroup provides BNPL for solar panels through its humm offering. 

“The decision today is a win for consumers,” flexigroup CEO Rebecca James said. 

According to flexigroup, humm has financed over 210,000 solar installations or nearly 10 per cent of all installed grid-connected solar systems in Australia.

“Of these, less than 1 per cent have experienced any hardship or default, clearly illustrating that additional regulation is not required to ensure great consumer outcomes.

“The decision recognises the importance and popularity of BNPL as a way to finance new energy technologies,” James said.