Buy-It-Now and Pay-Later Programs Trapping Tasmanians in Debt, But Regulation May Be Underway | Daily Liberal


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Some Tasmanians spend up to 30% of their bi-monthly income on late fees and Buy Now Pay Later loan payments, putting them even more in debt, according to the No Interest Loans Scheme Tasmania. Treasurer Josh Frydenberg announced on Wednesday that consultation on the regulation of the sector – which accounts for 20% of online sales in Australia – would begin next year, but not before the federal election. The lack of regulation has seen the number of players in the industry increase rapidly over the past two years after Afterpay’s initial dominance in the market. NILS Tasmania has expressed alarm at the increase in the number of Tasmanians in need of financial support due to escalating late fees, some with “pages and pages” of refunds on their bank statements. READ MORE: NILS Tasmania CEO John Hooper said individual statements showed some people were paying hundreds of dollars a fortnight in the programs, taking up nearly a third of their income. He said that then created other financial problems. “If you suddenly can’t make that first repayment, then the debt spiral can happen because they try to take out more payments, and the late fees, the bank arrears fees start, then the next one. fortnightly payback comes in, a failed bank levy leads to more fees, “Hooper said.” Since last year and this year we have seen it grow. This coincided with the fact that these companies are promoting themselves more, being all over the points of sale. “If you can pay on time that can be effective. But it’s the people who fail to repay on time and start accumulating debt that we worry about increases as the patterns are used. Late fees then apply if repayments are missed, at a flat rate, which can apply to all individual debts. The various schemes – with names like Sezzle, PayItLater and Fupay – have no mechanism for payment. overlap if a client has accumulated debt with other programs, which Hooper said was an issue. While welcoming the federal government’s commitment to introduce regulation, he said the issues with the programs were known for years. is struggling now is that these companies have become huge due to the increase due to the fact that it is not already regulated, “Hooper said. “Regulation is needed now before more vulnerable people are laughed at Federal regulatory agencies – such as the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission and the Reserve Bank – will report to the government at the end of next year on how to move the regulation forward. Lack of regulation means there is no monitoring of the fees charged for using the Buy Now, Pay Later programs, or evaluation market and competitive conditions. “With respect to new services like Buy Now Pay Later and digital wallets, the reforms will allow consumers and businesses to benefit from more appropriate regulatory oversight on fees, transparency and competition in the market, “a government summary reads. The regulations will not cover the programs. lease purchase or payday lenders, which have also proven to cause debt problems for disadvantaged Tasmanians.

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