Hamilton Locke Prepares Submission on Treasury’s Buy Now Pay Later Regulatory Reforms

Hamilton Locke has provided a submission to Treasury in relation to the Exposure Draft bill and regulations as part of the Buy Now Pay Later regulatory reform (Draft Reforms). This consultation gave us the opportunity to comment on the Draft Reforms and the impacts on the industry.

We have seen a limited form of regulation apply to the BNPL industry to date (for example, the design and distribution obligations and the BNPL Code of Practice). The Draft Reforms capture BNPL in the National Consumer Credit Protection Act 2009 (Cth) under a newly formed concept called ‘low cost credit contracts’ (LCCCs). A significant aspect of the reforms is a new opt-in responsible lending obligations (RLO) framework.

Our submission welcomes the benefits that regulation will have for existing BNPL providers including:

  • the ability to rely on information provided by the consumer in undertaking responsible lending checks (this would be done under a modified responsible lending framework, which BNPL providers can elect to be regulated by);
  • the flexibility of same-day approval;
  • a presumption that the product will not be unsuitable in cases where the credit limit or subsequent increases are less than $2,000.

We also sought to provide Treasury with feedback based on our experience in this sector to increase the overall effectiveness of the reforms and the ongoing development of the industry. These include:

  • two RLO frameworks potentially applying to some BNPL providers, with separate sets of processes and compliance frameworks required;
  • the risks of regulatory arbitrage. The changes may incentivise BNPL providers to charge higher fees in order to shift themselves out of the regulated area;
  • the conflation of the term ‘retail client’ which may create greater ambiguity (as the term is used elsewhere in financial services laws to mean something quite different to the way it is used in the Draft Reforms); and
  • the need for the Draft Reforms to consider other arrangements such as debt factoring.

We have provided specific recommendations to Treasury so that BNPL providers have greater regulatory certainty, consumers can be protected and the industry continues to innovate and thrive.

You can find our submission to Treasury, here.


Hamilton Locke’s Funds and Financial Services team are technical specialists that have a broad and deep understanding of payments regulation, together with other financial services regulations, which we use to provide practical solutions for a range of sectors, including credit, payments, funds, wealth management, crypto and general insurance.

We are technical and industry-focused specialists that have a broad and deep understanding of the Australian regulatory environment and the impacts that it has on our client’s products and service offerings. Our financial services expertise is market leading, and we use our industry knowledge and expertise to deliver practical, compliant, and innovative solutions for our clients.

For more information, please contact Jaime Lumsden, Nicholas Pavouris or Ruth Fesseha.


Senior Associate