Regulatory framework for low cost credit contracts

The National Consumer Credit Protection Amendment (Low Cost Credit) Regulations 2025 is to amend the National Consumer Credit Protection Regulations 2010 to establish a regulatory framework for low cost credit contracts (LCCC), including buy now pay later (BNPL) contracts.

This summary by Tiahna Cassar

The reforms extend the application of the National Credit Act and National Credit Code to BNPL arrangements and introduce LCCC as a category of regulated credit in Australia.

Under the changes, provides of BNPL products including Afterpay, Zip and Humm, and LCCC providers must comply with the National Credit Act, National Credit Code, and lending obligations. They are also required to consider financial hardship requests and credit reporting. From today, mandatory obligations for BNPL and LCCC providers will include holding an Australian Credit Licence with all appropriate authorisations, becoming a member of Australian Financial Complaints Authority (AFCA), and establishing appropriate processes and mechanisms for addressing consumer complaints.

What does this mean for consumers?

Australian consumers who experience issues with a BNPL product must firstly attempt to resolve their complaint directly with their provider. If consumers are unable to resolve the complaint directly with the provider, from today, consumers who use BNPL products (now including LCCC products) will have access to free independent dispute resolution through AFCA.

Read more here: https://lnkd.in/gPP6AqNV

Explanatory statement: https://lnkd.in/gJKRhkpK