ASIC to outline buy now, pay later concerns

ASIC on Monday is expected to make public a report detailing both its concerns and insights into the buy now, pay later industry.

As part of its latest review ASIC looked at international regulatory settings in a number of countries including Sweden, Britain, New Zealand and California. Picture: AAP

Two years after the corporate cop released its initial review of the buy now, pay later sector, the wait for a follow-up verdict appears to be over, with ASIC on Monday expected to make public a report detailing both its concerns and insights into the industry.

The review comes as Liberal senator Andrew Bragg fired a warning shot at the corporate regulator, saying it should not stray into public policy recommendations.

The senator expressed concern the report could harm the reputation of Australia’s vibrant fintech sector.

Senator Bragg, who leads a Senate committee looking into the industry, expressed concern the report could harm the reputation of Australia’s vibrant fintech sector and said it was important ASIC didn’t “overstep the mark and wade into Canberra’s territory by opining on policy”.

Australian fintech firms employed thousands and home-grown BNPL businesses had developed into world leaders, he said.

“Random actions from regulators can damage our tech sector’s standing, which is a problem when you’re competing for international investment against the likes of Israel and Singapore,” he told The Australian.

ASIC’s last review of the sector, released in November 2018, took place as the popularity of BNPL platforms was just ramping up (and when Afterpay was trading at a paltry $14). On Friday Afterpay closed back above $100 a share mark, ending up 2.6 per cent at $101.85. This gives Afterpay a market capitalisation of $30bn.

The number of consumers using the payment services rocketed fivefold from 400,000 in fiscal 2016 to 2 million by 2018. Today, about 6 million Australians have BNPL accounts.

Alongside its growing popularity is the threat of increasing regulation and the fear it will stifle the industry. ASIC’s 2018 report found that one in six users had either become overdrawn, delayed bill payments or borrowed additional money because of a BNPL arrangement.

As part of its latest review ASIC looked at international regulatory settings in a number of countries including Sweden, Britain, New Zealand and California.

ASIC commissioner Sean Hughes in August told a parliamentary hearing the regulator had also collected data from a number of institutions, including other lenders in the regulated credit sector and credit rating agencies, as he pointed to Financial Counselling Australia findings on BNPL.

“There are some amber lights that we are paying close attention to,” he said at the time.