PIAC made a submission to Treasury’s Regulating Buy Now, Pay Later (BNPL) in Australia Options paper, which included findings from our payment harms research we undertook in partnership with the Australian Communications Consumer Action Network (ACCAN). Our report, Paying to Pay: Using credit products to afford energy found:
- There is increased use of BNPL and similar credit products and they are increasingly being used for essentials, including energy.
- Credit products such as BNPL cause harm, including making bills more expensive (because of fees or interest), the difficulty paying them back and the debt spiral that can follow.
- The survey indicated high levels of usage of BNPL but there are currently relatively low numbers of people using these products to directly pay for their energy bills. Concerningly, 31% of energy respondents indicated they are likely to use BNPL to pay for their energy bills in the future.
- Many people value how credit products enable them to make smaller, regular repayments, help manage cashflow issues and unexpected expenses and that accessing a credit product is a ‘positive’ experience for some, giving a sense of control.
We advocate that the positive aspects of credit products identified by people should be available, subject to regulation, to help manage payments in the energy system, without the existing downside of fees and debts that come with unregulated products. Energy payments should not be able to be made via BNPL and other unregulated credit products.
This does not address the issue where people use BNPL for other expenses to free up money to pay for energy bills. There should be regulation of credit products to limit their availability and place more effective conditions on their accessibility to people on low incomes and that we support the work of Financial Rights Legal Centre, Consumer Action Law Centre and CHOICE in this area.
Access the report here: 22.12.14 Paying to pay – Using credit products to afford energy
