Buy Now Pay Later Reforms 9[th] April 2024
The Treasury
E: CreditReforms@TREASURY.GOV.AU

Subject: RegulaCon of the Buy Now Pay Later Industry: A PerspecCve from SACC and MACC
Providers

Dear Treasury

Thank you for the opportunity to contribute to the discussion on regulaCng the Buy Now Pay
Later (BNPL) industry. We believe that effecCve regulaCon is crucial to safeguard consumers
and ensure equitable condiCons for all credit providers.

The NaConal Credit Providers AssociaCon (NCPA) represents a diverse group of credit providers
and serves as the peak industry body for Small Amount Credit Contract (SACC) and Medium
Amount Credit Contract (MACC) providers. This submission is made on behalf of NCPA's SACC
and MACC members.

ClassificaCon of BNPL within ASIC Subsectors:
We propose a thorough examinaCon of the quesCon ‘which ASIC subsector will the BNPL
_services fall under?’_

In asking this quesCon, we wish to highlight the unfair ASIC levies that SACC and MACC lenders
have endured during and post-Covid by covering ASIC’s costs in relaCon to unregulated credit
products.

Over the years, the small ASIC subsector (called: ‘small and medium amount credit providers’)
has faced increasing levies of over 500% from FYE 19 ($8.06 per $10,000 loaned) – FYE 23
($52.96 per $10,000 loaned) due to our regulated status.  Meanwhile, unregulated products
such as Cigno and BNPL have operated without the imposiCon of an ASIC levy.

ASIC would argue that it is ‘beneficial’ to industry to pass on costs associated with unregulated
products to the closest related ASIC subsector, but the real-world results of these high ASIC
levies is regulated small businesses going out of business and as a result, jobs lost.


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The ASIC levies place an undue and undeserved burden which punishes regulated businesses
for the behaviour of unregulated businesses and creates a significantly unlevel playing field
within the Australian Financial ecosystem.

If unregulated products such as BNPL, will be subject to regulaCon in the future (which we
highly support), but do not fall under the same ASIC subsector which has been covering ASIC’s
expenses associated with unregulated credit products, we would seek consideraCon of a refund
of ASIC levies already taken for costs associated with unregulated products and ask that this
quesCon is carefully considered within the context of what is fair.

Perpetuated DiscriminaCon Against SACC and MACC Lenders:
Despite being compliant with regulaCons and delivering a much-needed service to over three
million financially excluded Australians, SACC and MACC lenders conCnue to face bias at the
poliCcal and regulatory level as a result of the confusion and failure to differenCate between
regulated Small Amount Credit Contracts, unregulated credit products such as Cigno, and illegal
credit products such as Payday Loans.

The consultaCon paper, perhaps unintenConally, perpetuates this confusion by using the term
“payday” lenders[1], when most likely the consultaCon paper was meaning to refer to regulated
Small Amount Credit Contracts. This mislabelling perpetuates negaCve stereotypes and
unfairly further tarnishes the reputaCon of SACC and MACC lenders, which further creates a
bias, which leads to regulatory and legislaCve discriminaCon. We urge fair treatment, a level
playing field and recogniCon of the role of SACCs and MACCs in providing essenCal financial
services to financially excluded Australians.

Comparison Rates and Perpetuated Confusion:
We congratulate Treasury for recognising the confusion which comparison rates cause for
consumers and the limited consumer benefit when a credit product is short term. ‘Treasury
Laws Amendment Bill 2024: Buy Now, Pay Later’ Exposure Draf Explanatory Materials pg 21
Sec 1.111

_“Comparison rates for small amount credit contracts can be decepAvely high for short-term_
_credit, and therefore provide limited benefits for consumers. The amendment disAnguishes_
_short-term credit from other credit contracts as consumers are likely to be confused by receiving_
_the disclosure informaAon of comparison rates for a product that does not actually charge_
_interest.”_

We applaud and agree with the removal of the comparison interest rate requirement for BNPL
and hope that this decision goes some way towards the removal of that expectaCon for all
credit products which offer terms on average of less than 12 months. Comparison rates have
been, and sCll are used against SACC and MACC lenders, by people who fail to differenCate
between regulated, unregulated and illegal short term credit products.

Primary Purpose and Impact of BNPL vs. SACC and MACC Lending:
The consultaCon paper incorrectly asserts that BNPL is a low -cost alternaCve to SACCs.

1 ‘Treasury Laws Amendment Bill 2024: But Now Pay Later’ Exposure Dra@ Explanatory Material pg 4 Sec 1.6.


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