Afterpay has grown into an international corporation with a value in excess of $AUD3 billion, and its share price has risen by over 37 per cent in trading last week and does not appear to fall within the scope of the Australian Consumer Law.
However, it may now come within the scope of the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018 currently before the Commonwealth House of Representatives.
The Bill intends to legislate the recommendations of the Financial System Inquiry to:
- ensure products are targeted at the right people; and
- provide a product intervention power for the Australian Securities and Investment Commission (ASIC) where there is risk of detriment to consumer
The Bill will now go through a period of open consultation. If passed, ASIC will have powers of intervention as defined in the legislation where there is a risk of consumer detriment, including short term credit for a period of less than 62 days.
It may be that in addition to Afterpay, which charges late fees rather than interest if its customers fail to pay on time, short term lenders such as Nimble may be caught by the proposed legislation.
It remains to be seen what form the legislation takes in its final form.