Charities urge politicians to make BNPL and wage advance products safer

  • By Zilla Efrat

Over 100 organisations have signed an open letter calling on the next Parliament to make buy now pay later (BNPL) and wage advance products safer.

Among those signing the letter are Financial Counselling Australia, Anglicare Australia, CHOICE, Financial Rights Legal Centre, Consumer Action Law Centre, Australian Council of Social Service (ACOSS), St Vincent de Paul and The Salvation Army.

Fiona Guthrie, CEO of Financial Counselling Australia, says: “Together our organisations support hundreds of thousands of people in hardship. We see first-hand the harm of unregulated BNPL and wage advance in our community.

“We know these products cause harm. BNPL is credit and should be regulated like other credit products.”

Kasy Chambers, executive director of Anglicare Australia, adds: “As more people struggle with the cost of living, too many are turning to these products to get by.

“Anglicare Australia and our members are seeing first-hand the harm this is doing to people who are being preyed on and getting trapped in debt.

“Our rules haven’t kept up, and unregulated lenders are taking advantage of the gap. We’re calling on whoever wins this election to bring in new protections that stop people from being stuck with debts they can’t afford.”

The letter says Australia’s consumer protections are not keeping pace with these new credit products, and the consequences are being felt by people and families.

“These products are not covered by our National Credit Code because their business models fall outside of the definition of credit used in the code,” it continues.

“As a result, BNPL and wage advance providers are not legally required to assess the ability of their customers to repay debts or offer adequate hardship support.

“The commitments in the current, voluntary, industry code are woefully inadequate. It doesn’t cover wage advance, is not properly enforced, and only eight out of more than 16 BNPL companies have signed up to it.”

As a first step, as in the UK, the signatories recommend an independent inquiry that should involve an expert panel, which includes a consumer perspective. This work should inform new regulatory protections, they say.

“Without greater consumer protections, these credit products will continue to cause unnecessary harm and have long-term consequences for people, families, and communities.”