Buy Now Pay Later Regulatory Change Review

This project, a partnership between Consumer NZ and FinCap, will produce an evidence base which the effectiveness of the new Buy-Now-Pay-Later regulatory regime can be assessed against the harms it aims to address, and allow recommendations to be made to the Government on whether further measures are required to protect consumers.

About the project

Buy-Now-Pay-Later (BNPL) lending can be an attractive alternative to traditional credit for many whānau, but BNPL debt can quickly accumulate and become unaffordable, leading to debt spirals. The way BNPL is marketed online doesn’t always make it look like a traditional banking product, like a credit card, but as a gateway to purchasing a wide range of alluring products.

Currently, the Credit Contracts and Consumer Finance Act (CCCFA) does not apply to BNPL. However, in August 2023, following a Cabinet decision, the Credit Contracts and Consumer Finance (Buy Now, Pay Later) Amendment Regulations 2023 declared BNPL contracts to be credit contracts under the CCCFA with exemptions from affordability and suitability requirements. If this approach is continued by the new Government, the changes aimed at increasing protections for borrowers will be implemented on 2 September 2024.

This project will investigate whether the changes currently scheduled for 2 September 2024 will go far enough to protect consumers, particularly more vulnerable New Zealanders who may use BNPL to bridge financial gaps but end up in deeper debt.

Grant amount

$69,539.77 for work in 2024 – 2025

About Consumer NZ and FinCap

Founded in 1959, Consumer NZ was created to empower New Zealand consumers and create a fair marketplace for everyone. As an independent, not-for-profit organisation, Consumer NZ’s work makes sure companies prioritise safety, fairness and honesty, and drives regulatory change that benefits all New Zealanders. See www.consumer.org.nz.

FinCap is non-government organisation which supports 185 free financial mentoring services in their work. FinCap advocate for change in the building financial capability sector to help prevent people from getting into financial hardship in Aotearoa. See www.fincap.org.nz.