10 Aug 2023

U-turn on affordability checks for Buy Now Pay Later

From Nine To Noon, 9:05 am on 10 August 2023
Empty wallet in the hands of man. Broke ,bankrupt concept.

Photo: 123RF

Budgeting services are frustrated at the Government's u-turn on plans which would require Buy Now Pay Later providers to do affordability checks before giving out loans.

Officials had proposed requiring the checks on anyone borrowing more than $600, to make sure it wouldn't send them into a debt spiral.

It prompted pushback from the Buy Now Pay Later industry, who argued they already protect consumers by freezing accounts when a payment is missed.

Commerce and Consumer Affairs Minister Duncan Webb has now concluded the checks would be "too onerous" given the providers only offer short-term, low-value loans.

But David Verry, a financial mentor with North Harbour Budgeting Services and a former banker, claims the Government is "going soft on consumer protection".