Consumer groups have launched a new attack on the buy now pay later industry, claiming that BNPL providers have facilitated predatory sales practices by solar panel retailers. They are calling for regulation of the sector.
Consumer Action Law Centre has made a submission to the Australian Competition Tribunal’s review of the New Energy Tech Consumer Code, a proposed industry code for new energy technology sales and installations.
The proposed code’s objectives are “to raise standards of consumer protection in the sector, strengthen consumer confidence in new energy tech and encourage innovation and the development of choice for consumers.”
The question of the use of BNPL in the sale if new technology, such as solar panels and energy storage batteries, has been contentious. In the original draft of the code submitted to the Australian Competition and Consumer Commission in April last year, signatories would have been required to ensure any deferred payment arrangements were provided by credit providers regulated under the National Consumer Credit Protection Act.
A later draft allowed for the use of BNPL. Under the code as it now stands, signatories will only be permitted to offer unregulated credit arrangements from credit providers that have been assessed as have specific consumer safeguards in place.
The tribunal is looking at adding more conditions to the use of BNPL.
CALC says in its submissions that “solar panel retailers offering BNPL finance have engaged in predatory unsolicited sales practices , signed up people to unaffordable finance arrangements and inflated the cost of solar panels.”
CALC chief executive Gerard Brody said: “Solar panel retailers that commit to this code shouldn’t be using this type of unregulated finance, and that’s what we are arguing at the tribunal.”
The submission details cases where people say they have been signed up to finance without their knowledge and which turned out to be more expensive that they had been led to believe.
Brody said: “Buy now pay later finance providers are not regulated in the same way as other credit providers. They aren’t required to assess if the loans – sometimes in the tens of thousands of dollars – are really suitable or going to cause people substantial hardship or make them over-indebted.”
CALC argues in its submission that the new code should include consumer protection measures. More broadly, it sees a need for law reform at address what it sees as the problems with buy now pay later finance.
“Buy now pay later products are loans and need to be regulated like other consumer credit products,” Brody said.