From 2 September 2024, Buy Now Pay Later lenders will need to comply with all the obligations of a lender under the Credit Contracts and Consumer Finance Act 2003 (the Act) and the Credit Contracts and Consumer Finance Regulations 2004 (the Regulations), unless an exemption applies.
Buy Now Pay Later contracts (BNPL contracts) have not previously been treated as consumer credit contracts under the Act, because no interest or credit fees are payable, or no security interest is taken. That means that lenders under BNPL contracts (BNPL lenders) have not been required to comply with important certification, fees, lender responsibility and disclosure requirements and borrowers under BNPL contracts have not had the protections provided by the Act.
The law changes on 2 September 2024. From that date, BNPL contracts are declared to be consumer credit contracts under the Act and BNPL lenders will need to comply with all the obligations of a lender under the Act and the Regulations, unless an exemption applies.
We have developed guidelines to explain:
the characteristics of a BNPL contract;
the obligations that BNPL lenders have under the Act;
the exemptions that apply (in certain circumstances) to BNPL contracts; and
the consequences of any potential breach of the requirements in the Act.
