A step in the right direction
June 26, 2025
Regulations introduced by the Australian Government in June provide a new legal framework for Buy Now Pay Later (BNPL) products. The intention is to reduce the risk of people being left worse off by using BNPL, but how effective will it be?
In January this year Financial Counselling Australia released data that showed the impact cost of living pressures were having on the financial wellbeing of Australians. In 2023 there were 3,203 calls and online chats made to the National Debt Helpline in Tasmania that is managed by Anglicare. In 2024 this rose to 3,700, which is a 15.5% increase. Issues of most concern to Tasmanian callers included mortgage repayments, rent, ATO debt, utility costs, car insurance and Buy Now Pay Later loans.
Anglicare Financial Counsellor Fiona Moore supports people to take back control of their finances. She’s seen a rapid rise in the number and popularity of Buy Now Pay Later products that allow consumers to buy goods or services with credit and then repay the loan over interest-free instalments.
“Our team see people who typically have several accounts with multiple providers, and increasingly they are being used for essentials such as food,” said Fiona. “Even clients who are willing to look at stopping their reliance on these products still tend to want to keep at least one account.”
What the new regulations mean
A new regulatory framework that was introduced last month brings BNPL providers under the Credit Act. They will be required to:
- hold a credit licence from the Australian Securities and Investments Commission (ASIC)
- become members of the Australian Financial Complaints Authority (ACFA), so that their customers have access to free dispute resolution
- consider customers’ hardship requests
- introduce caps on the maximum permitted default fees; and
- assess a customer’s ability to repay a loan.
They will be required to conduct a credit check on new customers but don’t need to obtain documentation that provides a clear picture of someone’s financial situation, such as bank statements.
Anglicare Tasmania’s Buy Now Struggle Later? report released in 2023 acknowledged that everyone should have access to safe, fair and affordable credit. Anglicare welcomes the regulations, particularly the provision of an independent complaints avenue, but does question whether they provide sufficient protections for vulnerable consumers.
“There is no requirement on companies to waive debts or refuse a customer who requests credit again in the future,” Fiona Moore explained. “People are reluctant to ask for a hardship arrangement as it means they cannot use the product during that time. These products are heavily marketed by retailers and this is a concern. And financial abuse is still possible where one party is taking advantage of another due to, for example, domestic and family violence, elder abuse or disability abuse.”
Minimising reliance on credit products
An Anglicare Tasmania financial counsellor can guide people to make informed, sensible decisions about their financial situation and minimise the use of credit products altogether. Understanding the difference between a ‘need’ and a ‘want’ are critical.
“We help people to set up a budget so they can see what money they have and where it needs to go each fortnight,” Fiona said. “A budget helps people stick to essential payments and then be able to clearly see how much money is left over for discretionary spending.”
A no-interest loan from NILS Tasmania provides people on low incomes with safe and affordable credit.
In 2023-24, NILS Tasmania provided 4,353 loans to Tasmanians that were worth $8.12 million. Loans were used to purchase vehicles and mobility scooters, heat pumps, fridges and washing machines, and to cover expenses associated with bond and rent, funerals, dental and medical care, veterinary care and micro-business loans.
Contact the National Debt Helpline
If you or someone you know is in financial hardship for whatever reason, ring the NDH on 1800 007 007 and you will be put through to an experienced, friendly professional at Anglicare Tasmania. Their advice is FREE and non-judgmental.
Sometimes all people need is help to set up a budget. If your situation is more complex, you can arrange a face-to-face meeting at one of our offices or an outreach site.
We can also advocate on your behalf with your creditors. We can stop them from contacting you directly.
We can also help you apply for a no-interest loan from NILS Tasmania.
