Australia’s Code of Practice for Buy Now Pay Late Providers comes into effect today, with a commitment by all code-compliant BNPL providers that they will conduct suitability assessments before taking on a customer.

The new code also includes a commitment to conduct additional checks to ensure customers are not over-extending themselves and to help people in financial hardship.

A code-compliant BNPL provider must be a member of the external dispute resolution service, the Australian Financial Complaints Authority.

The legal status of the code is that it “describes contractually enforceable commitments” enforceable by customers through AFCA.

The code was developed by the Australian Finance Industry Association, working with BNPL providers and consumer groups.

Code compliant members listed on the AFIA website include Afterpay, Brighte, hummgroup, Klarna, Latitude, Openpay, Payright and Zip.

Some notable absentees include Sezzle, Douugh and Splitit. Although locally listed, Sezzle does not have a product in the local market.

And while Douugh and Splitit market their products as BNPL, they do not meet the AFIA definition of BNPL because they do not take the credit risk on the funds they advance.

Some of the other commitments in the code include making sure staff, agents and representatives are trained, including in the management of vulnerability, ensuring that the product is suitable for the customer and timely complaints handling.

Customers must be fully informed, including being sent reminders, about product terms and conditions, repayment obligations, and all fees and charges.

When it comes to the assessment process, if the transaction limit applied for is over A$2000, the provider will make the assessment using customer data or third-party data (such as a credit check). If the amount is between $15,000 and $30,000, the provider will use customer data and third-party data.

The code will be reviewed on a regular basis by a code compliance committee.