On May 8, 2025, AST ASIC published Regulatory guide 281: low-cost credit contracts (RG 281) to support BNPL industry reforms taking effect on Jun. 10, 2025 (#214874).
RG 281 provides information to assist low-cost credit contract providers comply with key obligations, including modified responsible lending obligations; the reforms introduced aim to improve protection for Australian consumers using BNPL products.
Some obligations differ for BNPL contracts that meet definition of low-cost credit contract; providers may elect to comply with modified responsible lending rules.
BNPL providers who do not already have a credit license are encouraged to apply as soon as possible; those who do not have their license application accepted by ASIC by Jun. 10, 2025 may be engaging in unlicensed conduct if they continue to operate.
On Feb. 7, AST ASIC proposed guide for buy now pay later providers.
AST ASIC released draft Regulatory guide 000, low cost credit contracts (draft RG 000) and Consultation paper 382 - low cost credit contracts (CP 382) re same, for industry.
Follows AST ASIC Jan. 2025 guided on requirements for BNPL providers, see #240540.
The reforms establish low cost credit contracts as a new category of regulated credit.
AST ASIC said BNPL contracts that meet the definition of a low cost credit contract will have different obligations, which include the modified responsible lending obligations.
CP 382 Overview
CP 382 sets out AST ASIC’s proposals for providing guidance to credit licensees on the obligations that will apply to low cost credit contracts as well as BNPL contracts.
AST ASIC prepared the draft RG 000 in order to help providers understand their key obligations and requirements when making materials available electronically.
The guidance does not mandate particular requirements; the legislation allows credit licensees flexibility to determine what is appropriate in individual circumstances.
Highlights of RG 000
It explains the circumstances in which the low cost credit contract regime applies.
Explains the modified responsible lending obligations that credit licensees providing low cost credit contracts can elect to comply with, and other modified obligations.
Modified lending responsible lending obligations include easing some requirements about the timing of inquiries and verification and assessments of unsuitability.
In addition, they mandate certain inquiries about a consumer’s financial situation.
Plus, create a rebuttable presumption that contracts with a credit limit of AUD 2k or less meet the consumer’s requirements for the purposes of unsuitability assessments.
Effectiveness
The comment period for this consultation closes at 5pm AEDT on Mar. 7, 2025.
May 2025 RG 281 Issued
On May 8, 2025, AST ASIC published Regulatory guide 281: low-cost credit contracts (RG 281) to support BNPL industry reforms taking effect on Jun. 10, 2025 (#214874).
RG 281 provides information to assist low-cost credit contract providers comply with key obligations, including modified responsible lending obligations; the reforms introduced aim to improve protection for Australian consumers using BNPL products.
Some obligations differ for BNPL contracts that meet definition of low-cost credit contract; providers may elect to comply with modified responsible lending rules.
BNPL providers who do not already have a credit license are encouraged to apply as soon as possible; those who do not have their license application accepted by ASIC by Jun. 10, 2025 may be engaging in unlicensed conduct if they continue to operate.
Regulators
AST ASIC
Entity Types
Bank; CNSM; MSB
Reference
PR 25-069MR, Gd RG 281, 5/8/2025; CP CP 382, PR, 2/7/2025; Citation: National consumer credit protection act 2009; Treasury laws amendment (responsible buy now pay later and other measures) act 2024;
