Buy Now Pay Later: Draft Credit Contracts and Consumer Finance Amendment Regulations 2022
Summary
Buy now pay later (BNPL) products are a form of credit – in our view all credit products should be regulated under the Credit Contracts and Consumer Finance Act 2003 (CCCFA). We support the current amendments proposed to regulate BNPL under the CCCFA. However, we do not support the amendments proposed to include section 18I to allow exemptions for BNPL contracts from affordability assessments. The whanau that The Salvation Army support are predominantly households which depend on welfare or are employed in low-income jobs – the threshold of $600 proposed in our view will continue to create financial hardships for the whanau that we serve. Applying affordability assessments to all BNPL contracts will mitigate future financial hardships for many of the whanau we support but also benefit the financial sustainability of BNPL services. We highlight in this submission as we have in previous submissions that there are benefits to BNPL services particularly in contrast to alternative credit options such as pay day lenders and mobile trading trucks therefore safeguards such as affordability assessments are required for all BNPL contracts.