Interest rates

ASIC Chairman Joe Longo Says Rising Interest Rates Are Driving Consumers to Buy Now, Pay Later

Longo said “harmful and predatory credit products” were one of ASIC’s main areas of focus and that the regulator was targeting efforts to monitor credit cards, buy now, pay later. products and low-value credit agreements.

“Following the reforms of the Royal Financial Services Commission, we have significant powers which allow us to take stronger action against misleading behavior and reduce the risk of harm to consumers,” Mr Longo said.

Pensions Minister Stephen Jones said on Thursday the government would soon begin formal consultations on its plan to regulate the buy now, pay later sector.

“It’s an important innovation, but it needs to be seen through the lens of credit…and regulated appropriately,” he said.

Mr Jones said in June he wanted the new regulations to be in place by mid-2023, but said the laws would not be the same as those governing other forms of debt such as credit cards credit.

Because they don’t charge customers interest (retailers pay the fees), BNPL has broken out of traditional definitions of credit, a loophole that governments – and traditional lenders who compete with new players – have been keen to fill. as usage continues to grow. .

As The Australian Financial Review reported earlier this week, Afterpay and other buy now, pay later players may be required to verify their credit customers in the context of proposals currently being examined by the Treasury.

Financial Counseling Australia is campaigning to stricter regulations to buy now, pay later alongside the Consumer Action Law Center, the Financial Rights Legal Center and other advocacy groups.

The Treasury is preparing to release an options paper that will consult on models for regulating the controversial buy-now-pay-later sector.

With ASIC facing a two-year Senate investigation for allegedly failing to enforce the law, Jones reported talks with the Coalition to reduce the number of concurrent probes into the regulator.

“Our regulator is pretty well overseen,” Jones said, noting that ASIC was responsible for both hearings on Senate estimates and an ongoing oversight committee.

The latest inquiry was the result of a motion put forward by Coalition NSW Senator Andrew Bragg, who happened last month with the support of the crossbench but ran into opposition from Labour.

Mr Longo pushed back against criticism that ASIC had not been an active regulator, pointing to the agency’s enforcement activities over the past year.

He said ASIC carried out more than 1,000 surveillance exercises and more than 100 surveys in the past fiscal year.

ASIC has settled 61 civil cases and won $229 million in civil penalties, Longo said.