paul advocates for stronger consumer protection to prevent Australians from financial insolvency. paul support regulatory reform and strategic amendments to responsible lending laws, plus further investment in Financial Counselling Services.

paul supports the following 10 actions:

1. Apply Responsible Lending Obligations to Buy Now Pay Later (BNPL) providers.

• Current gap: BNPL providers are not subject to the same responsible lending laws as other credit products under the National Consumer Credit Protection Act 2009.

• Reform: Extend responsible lending obligations to include BNPL—requiring affordability checks and clear disclosure of repayment terms.

2. Cap Fees and Interest Rates

• Payday lending: While capped under the Small Amount Credit Contract (SACC) provisions (20% establishment fee, 4% monthly fee), lenders often find ways to structure fees that compound debt.

• Reform: Close loopholes, reduce caps further, and apply fee limits on all BNPL and short-term credit products.

3. Stronger Oversight of Marketing and Advertising

• Issue: BNPL and payday lenders often use language that downplays the risks or appeals to vulnerable groups (e.g., “interest-free,” “instant approval”).

• Reform: Enforce truth-in-advertising rules and ban marketing that targets people under financial stress or young people without stable income.

4. Stricter Credit Reporting Requirements

• Current gap: Some BNPL providers don’t report debts to credit agencies, making it hard for consumers and lenders to assess overall debt exposure.

• Reform: Require mandatory credit reporting for BNPL and payday loans to help prevent multiple concurrent debts and over-commitment.

5. Introduce a ‘Safe Lending Code’

• Reform: Create a binding code of conduct, particularly for digital and fintech lenders, outlining minimum standards for affordability checks, hardship assistance, and responsible debt collection.

6. Financial Literacy and Warning Disclosures

• Reform: Mandate simple, prominent warnings about late fees, total cost of credit, and long-term impact of missed repayments—similar to tobacco-style warnings or calorie counts on food.

7. Ban or Restrict Payday Lending in Certain Cases

• Reform options:

  • Ban payday loans to people receiving over 50% of income from Centrelink.

  • Implement cooling-off periods to allow consumers to reconsider.

  • Require external approvals (e.g., from a financial counsellor) for repeat borrowers.

 8. Increase Funding Financial Counselling Services

• Reform: Expand funding for community-based financial counsellors and require all BNPL and payday lenders to contribute to a hardship support fund.

9. Licensing and Conduct Regulation of BNPL Providers

• Reform: Require BNPL providers to hold a credit licence under ASIC and be subject to Australian Financial Services (AFS) conduct standards.

10. Enforceable Penalties for Breaches

• Reform: Strengthen ASIC’s power to investigate and penalise misleading conduct, predatory lending, or breaches of consumer protections—backed by real financial penalties and redress options for consumers.

On balance, paul also proposes additional investment in financial literacy workers to work with primary and high school students across the nation on practical money management skills. See paul’s separate post on these issues.

Inspiration

paul has worked as a financial (debt) counsellor and recalls the significant negative impact on the mental and physical health, and the financial future, of individuals and families with unmanageable debt. Life trajectories, housing options, and career opportunities can be significantly affected by a poor credit history, particularly if bankruptcy occurs. paul believes early intervention via well resourced financial literacy and a strong regulatory regime is essential to prevent the genuine misery brought about by unmanageable debt.