To ensure our clients and their financial wellbeing have been considered in the recently proposed CCCFA buy now, pay later (BNPL) amendments, we have written a submission.

We are concerned that the $600 threshold has only been considered from a commercial perspective, not a social or ethical one.

Most people who approach us for financial support have several BNPL accounts in use, and they are often used to purchase essential items in the short term. It creates longer-term issues when several payments become due at the same time, and the lack of affordability checks from some services leads to missed payments and subsequent penalties.

Excluding people borrowing less than $600 ensures the most vulnerable New Zealanders, who have very few alternatives to purchase essential items, have none of the protections provided to people who will be borrowing more than $600.

The convenience and value of BNPL for middle-income New Zealanders, who have alternative credit options such as mortgages, personal loans and credit cards, is based on a business model that is subsidised by people in hardship continuing to pay significant default fees. 

The harm that is caused by unmanageable debt was the reason affordability assessments were strengthened by Government in recent years, and these regulations should be extended to BNPL and other new forms of credit where harm can be caused by financial penalties being imposed on consumers.