22 May 2023

Address to the Responsible Lending & Borrowing Summit

I acknowledge the Gadigal people of the Eora Nation as traditional custodians of the land we are meeting on, and pay my respects to their Elders past, present and emerging.

I extend that respect to all First Nations people attending today.

The Uluru Statement from the Heart is a majestic document and I restate the government’s commitment to it.

I’d like to thank Samantha for that introduction and for the invitation to speak today.

We’ve just handed down our second Budget. A Budget forecasting a surplus this year and with support for the people who need it most.

I’m particularly proud of the $86.5 million Fighting Scams package I announced last Monday, which includes $58 million to establish a world‑leading National Anti‑Scams Centre.

Australians have been left to fend for themselves against scammers for far too long. $3 billion was lost last year, and that number has increased nearly five‑fold since 2020. I am proud to be leading the fightback.

This is my second time speaking at the Responsible Lending and Borrowing Summit. Last year, I said that “the Australian Government is back in the game of consumer affairs because it is good for consumers, and it’s at the heart of economic reform.”

The National Anti‑Scams Centre is a huge part of that.

And today, I get the chance to come back and talk about what we’ve done to make good on that promise in the world of consumer credit, and to talk about what is next.

What we’ve done so far – SACCs and Consumer Leases

Consumer protection is economy protection.

A strong economy requires well‑regulated consumer markets for credit products.

And so, access to credit products, like payday loans and consumer leases, have to be balanced with meaningful protections.

Shortly after the election, we confirmed that we would introduce legislation to finally respond to the 2016 Review on Small Amount Credit Contracts.

Implementing those recommendations was long overdue.

The Review told us that repeated payday borrowing by some vulnerable consumers was getting them into debt spirals, where debt repayments eat away more and more of a person’s income over time.

On consumer leases, the review heard that leases are often a high‑cost product offered to vulnerable consumers, who then often struggle to meet their payments. It found that between 25 and 35 per cent of lessees are behind on their payments.

The previous government heard all these things, read them all in the final report, and chose to do nothing.

For six years.

Consumers were left to face those risks alone for six long years.

Last year we got in and we acted, with legislation to make SACCs and consumer leases safer and better regulated for people who chose to use them.

Our Bill passed the Parliament in December last year. The bulk of the reforms commence from 12 June 2023.

Buy now, pay later

So step one was payday loans and consumer leases. An urgent issue where reform was long overdue.

Now, the Albanese government is taking action to protect consumers from the harms that can arise in relation to buy now, pay later products.

Buy Now, Pay Later (BNPL) products have created many opportunities across the Australian economy.

They have brought benefits to both consumers and businesses. In many ways, BNPL is a fintech success story; a financial innovation which has been exported around the world.

There are now around 7 million active BNPL accounts in Australia. The average BNPL consumer uses it for 18.2 transactions per annum, with an average transaction amount of $136.

Studies from the Australian Financial Industry Association tell us that in 2022, BNPL created an additional $2.7 billion in new revenue for merchants, through new customer acquisition, increased basket sizes and increased customer satisfaction and retention.

And, through its relatively low‑cost offering, BNPL has also provided a valuable source of competitive pressure on traditional credit products, such as credit cards or payday loans.

But with those opportunities have come new and growing dangers to consumers, which up until now have been largely unregulated and unchecked.

And evidence suggests that those risks are disproportionately affecting women, First Nations communities and people on low incomes. 

We have heard that some people are opening multiple BNPL accounts, to access far more debt than they’d be able to get on a credit card or a payday loan.

And we have also heard that some people may be weaponising BNPL products in abusive relationships – doing things like coercing their partners to take on BNPL debts or taking out BNPL debts in their partner’s name without their knowledge.

In a study conducted by Good Shepherd in late 2022, around 73 per cent of financial counsellors said that clients have missed essential payments, or cut back on essentials, or actually gone without essentials, in order to service BNPL debt.

Last year, ASIC found that 19 per cent of BNPL consumers showed two or more indicators of financial stress, such as cutting back on essential items or missing payments on other bills.

These accounts tell us, that doing nothing is not an option.

BNPL looks like credit, it acts like credit, it carries the risks of credit.

And so late last year the government began an extensive consultation on options to regulate BNPL.

And the people who know told us that there were unacceptable levels of unaffordable lending occurring, largely concentrated amongst low‑income borrowers, including those on social security.

The review also identified significant concerns with the quality of dispute resolution and hardship processes.

And the review told us that the issue is complicated. While BNPL customers are more than twice as likely to end up in financial trouble as a credit card customer, the risk is only half as big as for consumer leases and payday loans. So, while they aren’t the safest form of credit, they aren’t the riskiest either.

Other concerns raised by stakeholders included excessive fees, poor disclosure practices, problematic marketing practices, and unsolicited credit increases.

But equally many submissions highlighted the benefits to consumers of BNPL products.

That’s why we have arrived at a strong solution, and a proportionate solution.

Today I am proud to announce that the government will change the law, so that buy now, pay later products are regulated as credit products.

Under our plan, which was listed as option 2 in our consultation paper, buy now, pay later providers will be required to:

  • hold Australian Credit Licences;
  • comply with Responsible Lending Obligations;
  • meet statutory dispute resolution and hardship requirements;
  • comply with statutory product disclosure and other information obligations;
  • abide by existing restrictions on unacceptable marketing; and
  • meet a range of other minimum standards in relation to their conduct, and in relation to their products.

Our plan will give ASIC strong enforcement powers.

And our plan will involve industry consultation on the detail

And our plan will bring BNPL into line with other regulated credit providers, simplifying our regulatory system and addressing concerns about competitive neutrality.

The responsible lending regime will be central to our approach. However, our legislation ensures that the obligations on BNPL providers are scalable and technologically neutral. We will make sure they are the right fit for the risk level of their products.

Our plan prevents lending to those who cannot afford it, without stopping safe, prudent BNPL use.

There are consumers out there who have been excluded from traditional forms of credit, and who use BNPL carefully and frugally, to smooth the impact of large expenses, like when the fridge needs replacing or one of the kids has a birthday coming up. Some people use it for years and never miss a payment.

We don’t want to make life harder for them. Why would we?

But then, there are the other stories, like this one from a Good Shepherd Financial Counsellor:

“You normally see 3‑4 accounts, and people keep rolling them over. It keeps them in poverty… there’s always a point where people can’t manage more. They find out when they reach it. Each person is different but there’s always a point where it becomes a problem.”1

We have had to find a balance. And we think we’ve done it.

Our plan maintains the benefits of BNPL that many Australians enjoy, and we must ensure that providers will have appropriate safeguards in place, and we must ensure that they operate honestly, efficiently, and fairly, in line with other regulated credit products.

And we want to work with you on the detail.

Over the coming months, Treasury be working closely with the industry and with consumer groups, to make sure we get it right.

We want to have exposure draft legislation out for consultation later this year. And we will introduce the final Bill into the Parliament by the end of the year.


The government’s plan will help people.

The plan will protect people from the spirals of harm that unregulated, unrestricted lending can cause.

The Albanese government’s reforms in this space will have consumers at their heart.  

And they’ll protect our economy too.

Thank you all very much.

[1] Good Shepherd report - Safety net for sale: The role of Buy Now Pay Later in exploiting financial vulnerability [PDF 580KB]