What mortgage brokers need to know about the new BNPL regulations

Starting 10 June 2025, significant regulatory changes will take effect for Buy Now Pay Later (BNPL) services in Australia, enhancing consumer protections and aligning BNPL with traditional credit products like credit cards.

BNPL providers will need to hold an Australian Credit Licence, be a member of the Australian Financial Complaints Authority, declare and meet their use of either standard or modified responsible lending obligations, and meet stricter credit reporting obligations.

So what does this mean for you and your clients?

Key changes to BNPL

Credit reporting
To meet responsible lending obligations, BNPL providers will start using credit reporting information to assess a customer’s financial position more thoroughly. Additionally, one of the most significant changes for BNPL providers offering facilities over $2,000 is the requirement to participate in credit reporting.

To comply, BNPL providers must sign the Principles of Reciprocity and Data Exchange (PRDE), which governs industry data sharing and means they will be both accessing and sharing a consumer’s BNPL credit reporting data.

This is a win for mortgage brokers who have long held the view that BNPL facilities are a credit product. Verifying a customer’s financial position will become easier as BNPL information begins to flow through the credit reporting ecosystem.

Unfortunately, where facilities are less than $2,000, brokers will still need to find alternate ways to verify BNPL facilities.

However, the Australian Retail Credit Association (ARCA), which oversees the Credit Code, is actively encouraging BNPL providers to participate in comprehensive credit reporting regardless of the size of the BNPL facility.

Customer education and communication

Our members have told us that many consumers still do not realise that BNPL is a form of credit, and therefore, their borrowing behaviour can affect their credit history.

Under the new regime, BNPL providers must take proactive steps to educate their customers on the responsible usage of the facility, including avoiding excessive borrowing, repaying on time and seeking support from lenders if they experience financial hardship.

Brokers too, are in a position to help communicate the changes that are now in place to protect consumers. In particular, BNPL providers must be licensed, must conduct an assessment for new facilities or top-ups, and be a member of AFCA. 

CreditSmart (www.creditsmart.org.au) provides valuable resources to help consumers navigate credit responsibly.

Handling hardship and default reporting

BNPL providers must also align with the industry’s hardship requirements. They need to have processes in place to support customers experiencing difficulty, as well as procedures to report accounts that become significantly overdue.