Consumer groups say a self-regulatory code for Buy Now Pay Later lenders is no substitute for consumer protection in law

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Thirteen consumer groups have joined together to provide a submission on the draft Buy Now Pay Later Code of Practice (BNPL code), developed by the Australian Finance Industry Association (AFIA). While noting that industry codes can provide beneficial commitments, the consumer advocates consider inconsistent regulation among buy now pay later products and other consumer credit products risk causing harm, including over-indebtedness.

The submission, authored by Consumer Credit Legal Service WA, makes more than 50 recommendations, including that:

  • Buy now pay later arrangements should be regulated by the national credit laws;
  • Until this is achieved, the BNPL code should incorporate key protections like responsible lending, hardship arrangements and information and document provision requirements;
  • The BNPL code should do more to respond to consumer vulnerability;
  • Consumer law rights, such as consumer guarantee and refunds, should not be impinged by BNPL arrangements; and
  • Governance for the industry code should be independent of the BNPL industry.

The Consumers’ Federation of Australia coordinated the consumer groups’ submission.

“The fact that BNPL products are not regulated like other credit cards and personal loans means that the finance sector regulator, ASIC, has very limited oversight”, said Gerard Brody, chair of Consumers’ Federation of Australia.

“For example, unlike with other finance sector codes, ASIC is unable to approve this BNPL code to ensure it offers sufficient protection and is enforceable. The Financial Services Royal Commission made important recommendations around the enforceability of industry codes, including strengthening ASIC’s role. Unfortunately, so long as the BNPL sector continues to evade the credit laws, the BNPL code will not benefit from the same oversight as other finance industry codes”.

The joint submission welcomed key provisions in the BNPL code including that it provides contractual enforceability, consumers can take disputes on breaches to the Australian Financial Complaints Authority, that there will be caps on fees, that BNPL products should not be provided to people below the age of 18, and that providers promise to act fairly, honestly and ethically.

“Providing services ethically means that BNPL shouldn’t just finance any purchase, but they should take care to ensure it is an appropriate product to finance. For example, we don’t think BNPL should finance gambling purchases”, said Mr Brody.

Consumer groups also urge AFIA to require more robust responsible lending requirements.

“The BNPL code does promise that BNPL arrangements will only be provided where they are suitable, which is a good commitment. But we think the BNPL code needs greater specificity about what this means, and it would be best to align requirements with responsible lending laws. The use of automated systems to process and approve applications is problematic in this sector and does not guarantee that credit is suitable or affordable”, said Mr Brody.


The submission was prepared with funding provided by AFIA. View the submission here.

Media contact:

CFA Contact: Gerard Brody, Chairperson of Consumers’ Federation of Australia. Telephone: 0415 223 211. Email:

CCLSWA Contact: Gemma Mitchell, Managing Solicitor of Consumer Credit Legal Service (WA) Inc. Telephone:  0451 842 907. Email: