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AFIA and its BNPL members – Afterpay, Brighte, flexigroup, Latitude, Openpay, Payright and Zip Co – are responding to ASIC’s Report 600 and the Senate Economics Reference Committee, which recommended the development of a Code of Practice for the BNPL market. As part of finalising a world-first industry code of practice for this sector, we have a tremendous opportunity, and responsibility, to get this right and strengthen consumer protections for BNPL customers, while preserving customer choice to make purchases and payments in a way that suits their needs.
The BNPL Code addresses the Senate Committee’s recommendations and ASIC’s findings and goes above and beyond the law by ensuring customers have strong safeguards in place that help them better understand the product and their rights. It also sets standards around helping those customers that experience financial difficulties.Importantly, it means customers of BNPL services, that are members of AFIA, have access to the Australian Financial Complaints Authority (AFCA), the independent external dispute resolution scheme, if they have a complaint, they can’t resolve directly with the BNPL provider.
What will this Code do to prevent inappropriate marketing –
will those companies be suspended? Will there be penalties for vendors which breach community expectations?
The Code requires all Code Compliant Members to adhere to ASIC’s guidance for all marketing materials. BNPL Providers also have existing legal obligations to ensure that their marketing is not misleading to customers.
Each Code Compliant Member will take reasonable steps to ensure that its merchants or retailers adhere to the minimum standards which include communicating clearly when dealing with consumers and in marketing and advertising material that relates to Buy Now Pay Later Products or Services.
A Code Compliance Committee (CCC), independent of AFIA and the BNPL Providers, will be established to assess if BNPL providers meet criteria for becoming code compliant.The CCC will then monitor and enforce the Code. This Committee’s governance will follow similar AFIA codes, but the Committee is yet to be appointed. It will however include a customer representative.
Consistent with other industry compliance governance, the CCC has the power to impose sanctions on members who have breached the Code, ranging from formal warnings, requiring a rectification process, requiring a compliance audit, suspending through to revoking their membership.
In addition, the AFIA Board may also take action in relation to a non-compliant member. The actions will be meaningful to customers (which may include using remedies such as changing processes, re-training staff and revoking Code Compliance and AFIA membership). Stakeholders, customer advocates and customers will be engaged throughout the development of the code and their feedback taken into consideration, including appropriate sanctions