ALI MOORE:
Well, have you used buy now, pay later? Maybe it’s helped you in a crisis, maybe it’s become another debt burden. Give me a call, 1300 222 774. I’d love to hear how you use buy now, pay later, and whether or not it surprises you to find out that those products are not actually regulated like other credit products. There are changes coming, new consumer protection legislation that’s been introduced today. We’ll see buy now, pay later providers regulated as consumer credit. Stephen Jones is the Assistant Treasurer and the Minister for Financial Services. Stephen Jones, welcome to Drive.
STEPHEN JONES:
Good to be back.
MOORE:
What difference is this going to make?
JONES:
Well, you know, if you walk into any store in Australia today and you see on the counter that you can pay by cash, you can pay by Mastercard, Visa or Afterpay. The thing about it is, if you pay by a credit card, they’re regulated as consumer credit. But if you pay by Afterpay or any of the other buy now, pay later products, they’re not currently regulated as credit, although from a consumer point of view, they operate in almost exactly the same way. What these new laws will do is regularise that and ensure that those buy now, pay later players are brought within the protections available to consumers through the National Consumer Credit Act.
MOORE:
And what does that actually mean in practice? Does it mean anyone who wants to use a buy now, pay later will have to have a credit check and will have to be assessed for ability to pay?
JONES:
Look, no change for existing account holders but what it will require is for the companies that are offering these credit products to do a credit check, what we call a responsible lending obligation check, before they sign somebody up. And in simple terms, what that means is that they assure that the product that’s being offered is going to be affordable for the customer.
MOORE:
Does it give the customer extra protections if in the end they can’t pay?
JONES:
What it does is it ensures that the customer will have more consumer protections and if something does go wrong, they’ll have access to the hardship provisions and dispute resolution procedures that are mandated under the Consumer Protection Act. But more important than that, it ensures that you don’t get into trouble in the first place, that you don’t get in over your head in the first place. That’s what these lending obligations are all about, ensuring that the credit providers have some responsibility to ensure they’re not offering inappropriate products in an inappropriate way to people who can’t afford them.
MOORE:
What about existing customers? Why won’t it apply to them?
JONES:
Well, there’s going to be a phase‑in period, if you like, that’s probably the best way to describe it, so that the impact of these laws will not be looking backwards, but it’ll be looking forwards to ensure that they apply to new customers of these credit providers.
MOORE:
But clearly, I’m assuming the issue that you’re trying to address is the fact that people get in over their heads, and that’s come to the fore because of problems with existing customers.
JONES:
Taking a pragmatic approach to it, Ali, wanting to ensure that the burden is appropriate to the risk and the checks are appropriate to the risk, it would be a significant administrative and business burden to ask the businesses to go backwards across millions and millions of their existing customers and do these checks. What we’re saying to them from the day the legislation passes through and is promulgated, then these obligations kick in. They’re scaled as well. That’s because we acknowledge that buy now, pay later – I mean, these aren’t home loans. They’re not loans worth hundreds of thousands of dollars. They’re generally small credit contracts, less than $2,000. And for most consumers, they’re only a couple of $100 for a new pair of sneakers, a new pair of jeans. The risk is smaller and the obligation and the checks involved in this will be scaled to the risk involved.
MOORE:
At the same time, as you’ve noted yourself in what you’ve put out to the media, there was a survey by Good Shepherd which found that 84 per cent of financial practitioners reported that clients tried to manage debt by using these services, and then they ended up in a debt spiral. So, isn’t the issue that – I completely understand that you can’t ask them to go back through thousands and thousands of previous customers, but what about all active customers?
JONES:
Yeah, again, the same thing, Ali. We want to take a pragmatic approach and ensure that we don’t put an unreasonable burden on these companies that are providing the products. And let’s not forget, overwhelmingly, the people who are using them are using them just to manage and smooth their income and their cash flow. So, overwhelmingly, the people involved in using these products aren’t getting into trouble. And the measures that we’re putting in place are to ensure that we provide some protection for all customers, but particularly focused on those people who are at risk of getting into trouble through getting in way in over their head and taking on products that they can’t afford.
MOORE:
You’re listening to the Assistant Treasurer, Stephen Jones. He’s also the Minister for Financial Services, and he’s introducing new legislation today around buy now, pay later providers. I wonder if you use a service and have you found that it’s a temptation to maybe use them too much? 1300 222 774. Minister, you’ve on this program and in many other places been highly critical of the social media giants. You’d be well aware that the eSafety Commissioner today has abandoned her Federal Court case against X, which was aimed at removing graphic videos. That’s a pretty big win for Elon Musk, isn’t it?
JONES:
Look, I haven’t caught up with the reasoning that the eSafety Commissioner has put out. I’ve literally just walked into my office and seen that on the screen, I’ve been in parliament all morning. I’ll look carefully at the reasoning that’s been given. I think Julie Inman Grant, the eSafety Commissioner, is doing a very good job and is a first class regulator. Whatever the reasons for that decision, it does not dent our resolve to ensure that social media platforms are abiding by Australian laws and Australian norms. And I’ve got a raft of reforms that I’ll be introducing into parliament later on this year to address scams and other forms of social harm. And right across the government, there is other work underway to ensure that we clarify and improve the law, to ensure that social media platforms are keeping their environments and their platforms safe.
MOORE:
That case has been going now for many weeks and I guess it was only on Monday that you actually, as a government, vowed to fight any legal challenges brought by this company over removal orders. If it’s been so obvious that it’s a global issue that, you know, that the Australian law is up against a global monolith that we can’t necessarily control because our laws don’t go that far. Why was the case started in the first place?
JONES:
Because the material that was published was offensive in the extreme and dangerous, and every other platform took it down except X, and they were way out of step with social norms and it was the right decision to get it taken down. They did take some of the material down on an interim basis and I think it was successful in that respect. If the case has highlighted the fact that we have deficiencies in our law, then I am absolutely certain that we’ll address those deficiencies. And whether it’s by legal means or other means, sending a clear message to these operators that they cannot be a wild west is absolutely essential. If that requires law reform to fill these gaps up in the law, then that’s exactly what we’ll do.
MOORE:
Stephen Jones, thanks for talking to us.
JONES:
Good to be with you, Ali.