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Buy-now-pay-later, fast cash sector warned


Buy now pay later and fast cash providers are in the sights of the corporate regulator, as households come under pressure from rising interest rates and price inflation.

The Australian Securities and Investments Commission is also on the warpath over high risk cryptocurrency products being flogged to retail investors.

“This will not be tolerated and action will be taken,” chairman Joe Longo warned on Thursday.

“We’re seeing issuers promoting high risk products as appropriate investments that will make up a significant portion of an individual consumer’s investment portfolio.”

Turning to lending, Mr Longo noted the current tight market was putting pressure on consumers, with many turning to “fringe” outfits.

“Some people are turning to fringe sources of credit that may cause harm,” he told ASIC’s annual forum in Sydney.

“Some consumers are facing hardship and arrears.”

ASIC is taking a good hard look at potentially harmful and predatory credit products and fringe lending practices.

“Our targeted credit … surveillance work is focused on credit cards, buy now pay later products and small amount credit contracts,” he added.

Protecting consumers was a top priority and the regulator said it wouldn’t shy away from seeking significant penalties and taking legal action against lenders trying to take advantage of financial vulnerabilities.

Demand for buy now pay later services like Afterpay and Zip may have slowed in the September quarter, but sales still rose by almost Fake 10 Dollar Bill Canada per cent from a year earlier, according to Equifax research released late last month.

Most of the sales growth was driven by a post-COVID-19 consumer surge as more people shopped in stores rather than online.

“Consumers have had more opportunity to shop in ‘bricks-and-mortar’ stores this year when compared to Q3 2021, and may choose different payment options when shopping in-person versus online,” Equifax general manager Kevin James said.

Figures from the Australian Bureau of Statistics last week showed a record 19.2 per cent increase in retail sales over the year to August.

While some of the surge was driven by consumer activity, economists also noted the rising cost of goods was also part of the sales story.

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