The Australian government is set to introduce new regulations for the buy now pay later (BNPL) industry in response to concerns over excessive fees, unaffordable lending, and lack of transparency. These regulations aim to protect consumers from financial hardship by imposing caps on late payment and account fees, requiring BNPL providers like Afterpay and Zip to consider a customer's collective loans, and preventing the practice of account cycling to charge new account fees. Additionally, the process for applying for BNPL services will become stricter, with more in-depth checks into applicants' credit history, income, and expenses. BNPL transactions will now be treated as low-cost credit contracts, making providers subject to the National Consumer Credit Protection Act and requiring them to hold an Australian credit licence. The move is intended to ensure responsible lending and could affect consumers' credit ratings due to reporting of repayment history to credit agencies. The draft legislation is currently under consultation, with the aim of being introduced to parliament later in the year and coming into effect six months thereafter.
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