AFIA welcomes BNPL Code Compliance Committee report on first year of self-regulation

AFIA today welcomes the release of the first report of the independent Buy Now Pay Later (BNPL) Code Compliance Committee.

The Code Compliance Committee oversees the operations of the BNPL Code of Practice (Code), and investigates any complaints reported to it by consumers as part of a three-tier level of consumer protection; the first level being complaints made directly to the providers, the second level being escalated to AFCA as a dispute, and the third tier being those complaints lodged with the Code Compliance Committee.

The Committee is chaired by former long-term ACCC Deputy Chairman, Dr Michael Schaper, and also includes a consumer representative nominated by the Consumers Federation of Australia, Ms Jillian Brewer, and an experienced industry representative, corporate director and lawyer, Mr Craig Pudig.

It is one year since the world-first BNPL Code was implemented in Australia by AFIA on 1 March 2021, and this report provides a review of its first 12 months of operation.

The report provides an overview of complaints and alleged breaches of the Code and actions taken by the Committee to resolve these.

In addition, following completion of the annual re-accreditation process, all eight of the current Code signatories were confirmed to be compliant and were re-accredited for a further 12 month period. These are Afterpay, Brighte, Humm, Klarna, LatitudePay, OpenPay, Payright and Zip.

Diane Tate, CEO of AFIA, thanked Dr Schaper and the Code Compliance Committee and said its BNPL members remain committed to proactively delivering consumer protections that go above and beyond the law.

“I would like to thank the Code Compliance Committee for their oversight and commitment to improving the effectiveness and efficiency of the BNPL Code over a year of great change and economic and social instability.

“The Code was developed proactively by our BNPL members to provide a set of enforceable standards and protections BNPL customers can expect from their provider.

“The Code benefits consumers and merchants and should be viewed as a commitment by the BNPL sector to deliver high standards for customers. These protections will become even more important as Australians increasingly choose to adopt innovative products, like BNPL, to manage their money and cashflow,” Ms Tate said.

Dr Schaper said, “We are very encouraged by the engagement we have had with each of the BNPL Code signatories.

“In our work this year, we have seen low numbers of consumer complaints on BNPL – this includes complaints made directly to the BNPL providers, escalated to AFCA as a dispute, or complaints lodged with the Code Compliance Committee as a breach of the Code.

“Where complaints have been lodged with the Code Compliance Committee, we are pleased with the cooperation of the relevant providers in reviewing internal systems and processes to improve their own efficiency and effectiveness and deliver improved customer outcomes.

Diane Tate said, “AFIA strongly encourages BNPL providers to adopt a continuous improvement mindset and look for ways not just to comply with the Code, but to strive for industry best and better practice.

“AFIA also reminds consumers to seek out BNPL providers that are BNPL Code signatories to ensure they have access to higher consumer protections and enforceable standards in the event something goes wrong. Look for the ‘Code tick’ on the BNPL providers’ App or website.

“Importantly, ‘payday lending’ activities are not BNPL, and given reports of some recent marketing practices, we have specifically excluded such activities from the Code, so there is no confusion for customers,” MsTate said.

The Code is set to be reviewed at its two year anniversary, 1 March 2023, to ensure it continues to meet community expectations and the consultation process with stakeholders will commence later this year.