ASIC reminds BNPL firms of incoming credit licence requirement

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The Australian Securities and Investments Commission (ASIC) has reminded that BNPL firms must apply for a credit licence ahead of the implementation of new laws. 

In December, the National Credit Code was extended to BNPL contracts following royal assent of the Treasury Laws Amendment Act 2024. This law requires providers of BNPL contracts to hold a credit licence and become a member of the Australian Financial Complaints Authority ahead of 10 June. 

ASIC has asserted that firms should apply as soon as possible to ensure they receive a licence before the deadline. The regulator explained that the process may take some time due to obtaining additional information in applications. 

Under the new act, providers will have to comply with modified responsible lending obligations. However, ASIC has yet to release specific details about regulatory changes and stated it will do so closer to June. 

This development has been in the works for the last couple of years, with the Australian government announcing that it was looking at bringing reforms to the sector in 2023. At the time, regulators were concerned about the impact BNPL could have on indebtedness.

Steven Jones, Assistant Treasurer, who was the first to introduce reform, stated: “Evidence suggests that those risks are disproportionately affecting women, First Nations communities and people on low incomes. 

“We have heard that some people are opening multiple BNPL accounts, to access far more debt than they’d be able to get on a credit card or a payday loan. And we have also heard that some people may be weaponising BNPL products in abusive relationships – doing things like coercing their partners to take on BNPL debts or taking out BNPL debts in their partner’s name without their knowledge.”

Global spotlight on BNPL

Australia isn’t the only country concerned about how BNPL products are regulated, with an extensive debate ongoing in the US around how regulators should approach the sector, which is growing in use just as much as in other countries.

Last year, the Consumer Financial Protection Bureau (CFPB) classified all BNPL lenders as credit card providers, meaning users will be subject to the same legal protections and rights as traditional credit card holders. 

However, the Financial Technology Association (FTA) called the CFPB’s final interpretation rushed, adding that it legally oversteps its authority and could lead to confusion. 

The FTA agreed that BNPL products and services must be regulated but felt that putting them in the same category as credit card providers wasn’t correct. This was also the opinion of major BNPL firm Klarna, which likened CFPB’s ruling to comparing “oranges and apples”. 

In 2025, regulators are still grappling with how to create sufficient guidelines for the sector. Last week, government officials in the Netherlands raised concerns about consumers using BNPL to purchase in-store items.

Klarna, yet again, was quick to counter this argument. The Swedish fintech highlighted that in the Netherlands 99.4% of Klarna loans are repaid in full. Despite this statistic, the Dutch government is set to discuss the possibility of a ban on these types of loans.