Submission on Buy Now Pay Later Consultation (BNPL)

Summary

1. The Salvation Army strongly urges the regulation of BNPL services under the Credit Contracts and Consumer Finance Act (CCCFA) 2003. Under the CCCFA BNPL products should have certain exemptions and flexibility to continue to be innovative but still provide protection for consumers.
2. The Salvation Army acknowledges that clients who are consumers have highlighted the benefits BNPL products provide. BNPL products are affordable, accessible, and easy to use. However, our frontline services (Financial Mentors and Community Finance Caseworkers) have also highlighted many concerns and issues our clients have encountered using BNPL services – lack of understanding how BNPL services work, excessive advertisements and impulse purchases which lead to financial hardship.
3. Overall, we acknowledge there are benefits of BNPL for consumers, including for those people and whanau using our services. The kind of debt and the hardship from that debt that people experience using BNPL loans is significantly less harmful than with other kinds of third tier credit. We believe that the trajectory, competition, and innovation of BNPL products without the appropriate accountability and transparency for consumers will perpetuate financial hardship for our vulnerable consumers.

 

---

Photo by CardMapr on Unsplash