# Exposure draft Treasury Laws Amendment Bill 2024: Buy Now Pay Later

12 April 2024


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Mr Daniel McAuliffe
Director, Consumer Credit Unit
Treasury
[creditreforms@treasury.gov.au](mailto:creditreforms@treasury.gov.au)

Equifax welcomes the release of the exposure draft Treasury Laws Amendment Bill 2024:
_Buy Now Pay Later and the associated National Consumer Credit Protection Amendment_
_(Low Cost Credit) Regulations 2024 [the draft Bill]._

Equifax’s 23 December 2022 submission to the Regulating Buy Now, Pay Later in Australia
consultation paper outlined five principles for reform:

_1. The regulatory framework for BNPL must not impede BNPL’s automated, low-friction,_
_origination experience._

_2. Like other credit products, there needs to be insight into BNPLs’ wider impact on people &_
_the economy. This can be achieved via BNPL providers reporting on a range of metrics to_
_either ASIC or Treasury, who in turn should publish aggregated insights._

_3. The regulatory framework should enable and support contribution of credit reporting_
_information; this helps other credit providers to better assess credit enquiries from people_
_who are, or are at risk of, becoming over committed._

_4. Contribution of credit reporting information, including repayment history information, lifts_
_financial inclusion of consumers, particularly those who lack significant information on their_
_credit report and may struggle to access mainstream credit (”known as a thin file”)._

_5. The introduction of a regulatory framework for BNPL should not impede further credit_
_innovation_

Having reviewed the draft Bill, Equifax considers the provisions go a significant way to
meeting these principles.

In particular, Equifax welcomes the Exposure Draft National Consumer Credit Protection
_Amendment (Low Cost Credit) Regulations 2024 (Regulations) and their recognition of credit_
information in the modified responsible lending obligations proposed for Low Cost Credit
Contracts (LCCC), encompassing buy now pay later (BNPL) contracts.

The modified provisions would require a credit enquiry with a credit reporting body (CRB)
when assessing an applicant for a LCCC, or an increase to the credit limit of an LCCC.


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Depending on the value of the contract, this check may be a “negative” enquiry, revealing
previous enquiries, or if the value of the contract be $2,000 or greater, a partial enquiry,
revealing an applicant’s consumer credit liability information.

In both instances, enabling enquiries (“negative” or “partial”) and the corresponding
contribution obligations under reciprocity obligations (pursuant to the Principles of
Reciprocity and Data Exchange (PRDE) in relation to CCLI, or under contractual reciprocity
arrangements with CRBs where only “negative” information is required), would, in Equifax’s
view, be practicable for LCCC providers to implement.

“Negative” CRB enquiries have been conducted for more than half a century in Australia,
and partial enquiries can be enabled for BNPL providers in a similar fashion to what is used
by the telecommunications sector.

Regarding the proposed “negative” enquiries under regulation 28HAD(2) of the Regulations,
Equifax notes that the list of categories of “negative” credit information which a LCCC
provider must seek to obtain in respect of contracts with a value of less than $2000, does
not include credit information referred to in section 6N(e) of the Privacy Act 1988 (Cth) (the
**Privacy Act), namely:**

“the type of consumer credit or commercial credit, and the amount of credit, sought

_in an application:_

_(i) that has been made by the individual to a credit provider; and_

_(ii) in connection with which the provider has made an information request in_

_relation to the individual;”_

Such credit application information forms part of the information ordinarily supplied by a
Credit Provider (CP) to a CRB at the time of making an “information request” referred to in
section 6N(d) of the Privacy Act, and is provided in turn by a CRB to a CP as part of the
“negative” credit information supplied in response to an “information request”. Therefore,
Equifax submits that it would be appropriate for the credit application information referred
to in section 6N(e) of the Privacy Act to be included as part of the “negative” information to
be sought by a LCCC provider under regulation 28HAD(2).

Equifax also welcomes the Regulations Exposure Draft Explanatory Statement’s recognition
of derived credit information (that being, for example, credit scores) as a means of validating
information provided by an applicant for a LCCC (regulation 28HAD(5): The licensee must
also seek to obtain certain information about the consumer that the licensee “reasonably
_believes” to be substantially correct)._


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The accuracy and predictiveness of derived credit information, such as credit scores and
score bands, continues to grow with the inclusion of information, like repayment history, and
evolving data scoring techniques, to the benefit of both consumers and credit providers.


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