How to Navigate Regulatory Changes in the Buy Now, Pay Later Industry

The Australian Buy Now, Pay Later (BNPL) sector is certainly facing a challenging time. Announced earlier this year at the Responsible Lending and Borrowing Summit, a change in legislation to classify BNPL products as credit products is set to come into effect by the end of 2023, acknowledging the need for greater transparency and accountability from the BNPL providers.

Enforced by the Australian Securities and Investments Commission (ASIC), this change means BNPL businesses will have to meet certain elements of the existing National Consumer Credit Protection Act, compliance with Responsible Lending Obligations and having to hold Australian Credit Licenses; alongside meeting statutory dispute resolution and hardship requirements while adhering to product disclosure obligations and marketing restrictions.

These changes undoubtedly represent a major shift in the financial landscape in Australia. An ability to adapt to these changes will be decisive factor in the survival of the Australian BNPL industry, with one provider already in administration having declared that they would be ‘unable to absorb the costs’ that compliance with new regulations will demand.

What Can BNPL Providers do to Prepare for Compliance?

The Treasury’s consultation paper said there were 7 million active BNPL accounts in the 2021-22 financial year, resulting in $16 billion AUD in transactions. This represents an increase of nearly 37 per cent compared to the previous year. It’s clearly a rapidly growing sector, which, up until now, has been relatively unregulated—something that’s set to change dramatically with the advent of the new regulation.

Having explored three potential options for regulation, the federal government’s final decision requires BNPL products to meet modified Responsible Lending Obligations under the Credit Act to determine unsuitability, combined with a strengthened Industry Code. This means that BNPL services in Australia are entering a new era that places a premium on: 1) consumer protection, 2) regulatory compliance and the 3) effective management of customer relationships.

If your company is part of the Buy Now, Pay Later industry in Australia, the ability to deliver better outcomes for both your business and your customers has become even more crucial. What can your organisation be doing now to get ahead of the curve and hit the ground running once the changes come into effect?

Technology certainly has a key role to play, with features within a complaint management system going a long way to help provide the transparent, traceable and structured complaint handling processes that compliance with the Credit Act demands. At the same time, a good solution can help to improve relationships with customers too, promoting greater customer outcomes, satisfaction and trust.

Complaint Management for the BNPL Industry

With robust case management, advanced reporting capabilities and insightful analysis, our complaint management solution, Aptean Respond, has the potential to help your BNPL business meet the dispute resolution and hardship requirements that additional legislation puts in place. Aptean Respond delivers a transparent, structured and traceable process to help you handle customer complaints and feedback.

When it comes to complaint management software, our comprehensive, cloud solution provides case process management, compliance management, case agent and case manager workspace, workload management and quality management capabilities. This is all while consolidating the necessary information alongside all the people and activities required to resolve a complaint efficiently—and resolve it compliantly.

This gives you the ability to connect your front and back-end activities—tracking, automating and assigning all the tasks associated with effective complaint handling. Additionally, Aptean Respond has the capability to guide your caseworkers through a prescribed, compliant resolution process appropriate to the information gathered at initial contact; helping to ensure all necessary steps are taken and within mandated timescales too.

Compliance, Efficiency and Protection for Consumers

Aptean Respond is so much more than a system of record, instead acting as an early warning or early response system for BNPL businesses when dealing with complaints. In line with the legislation, it helps to make sure mandatory steps are taken within compliant timeframes by tracking and enforcing necessary actions, helping to mitigate risk.

Additionally, Aptean Respond helps to fulfil the hardship requirements of the regulation, with vulnerability detection technology able to boost the capabilities of your already skilled workforce to help ensure no vulnerable customers slip through the net. Help reduce costs; automate time-consuming and often error-prone processes; improve throughput and operational efficiency while freeing-up the team to focus on more value-add activities with our case and compliance software.

Aside from compliance, Aptean Respond can hold the key to identifying product and service improvements for your BNPL firm, providing insight into the customer journey that’s unavailable elsewhere in the business. It’s this insight that has the potential to inform tangible improvements right across the organisation, helping the wider business to do everything within its power to protect consumers at every customer touchpoint.

Turning a Challenge into an Opportunity

By leveraging technology like Aptean Respond, BNPL companies can turn the forthcoming regulatory changes into an opportunity for growth and innovation. With over 30 years of experience working with the financial services industry, Aptean is acutely aware of the daily challenges faced by companies in the financial services sector and delivers technology to help tackle these challenges head-on. The impending legislative changes are no exception and BNPL providers can benefit from Aptean’s experience and expertise, helping you to successfully navigate the changing regulatory landscape.

Aptean Respond can help you achieve excellence in complaint management, while underpinning that all-important regulatory compliance, enabling you to focus on your core business operations. It is possible to remain efficient and profitable while enhancing customer satisfaction.

We offer the solution that meets the unique needs of the BNPL industry, supporting your journey towards a more secure and consumer-friendly future. For more information on how Aptean Respond can support your BNPL business with the forthcoming legislative and regulatory changes in Australia, contact us today.