Consumer groups welcome BNPL Regulations but sound the alarm over last-minute fee increase
Leading consumer groups have sounded the alarm over a last-minute increase to certain fees under the Federal Government’s proposal to regulate Buy Now Pay Later (BNPL).
The BNPL Draft Regulations 2025 will see the introduction of long-overdue consumer protections which will make the products safer. However, a last-minute change to the regulations allows certain BNPL models, including Afterpay, to more than double their late fees – a move that risks undermining the intent of the rules.
The increased late fee cap for providers like Afterpay risk creating a ‘poverty premium’, disproportionately affecting low-income Australians who are already struggling to make ends meet in a cost-of-living crisis.
The groups – including CHOICE, Financial Counselling Australia, Financial Rights Legal Centre and Consumer Action Law Centre – have made a submission on the proposed changes urging the government to reinstate the previously proposed $120 annual cap on all BNPL late fees.
Quotes attributable to Tom Abourizk, Head of Policy CHOICE
“By more than doubling the late fees that BNPL lenders, like Afterpay, can charge annually, the government is allowing the costs of providing BNPL to wealthier people to be covered by people on low incomes.”
“The proposed change to the BNPL late fee cap, quite simply, increases the risk of BNPL models, like Afterpay, pushing people in financial hardship further into revolving debt.”
Quote attributable to Dr Domenique Meyrick, co-CEO of Financial Counselling Australia
“Buy now pay later debt is one of the main presenting issues to the National Debt Helpline. These regulations are badly needed. The issue is, they don’t go far enough.”
“Financial counsellors see the harm unregulated BNPL causes to their clients and mounting late fees mean many fall into debt spirals. The new regulations must ensure there are adequate caps on all late fees.”
Quotes attributable to Drew MacRae, Senior Policy and Advocacy Officer at Financial Rights Legal Centre
“Increasing the amount that buy now pay later products can charge people struggling with their finances is simply a penalty for being poor. While we very much support finalising these regulations to bring buy now pay later in line with all other forms of credit, this lastminute increase is disappointing and a move that will largely harm those who can least afford it.”
Quotes attributable to Stephanie Tonkin, CEO at Consumer Action Law Centre
“Financial counsellors who work on our frontlines hear all the time from people with multiple BNPL accounts, whose circumstances mean they are forced into a “money juggle” and using BNPL to afford everyday essentials.
“We welcome the laws bringing BNPL within consumer credit regulation, but increasing the fees and penalties that some models can charge people who are facing financial difficulty is the wrong move. It will push many consumers into insurmountable debt.”
Above is a joint media release (13/02/2025) from Financial Counselling Australia’s website – available here.
For comment contact: CHOICE on 0430 172 669 or email media@choice.com.au.