We’re pleased to share the findings of a joint report from Consumer NZ and FinCap examining whether recent Buy Now, Pay Later (BNPL) reforms are protecting consumers from harm.

This report concludes a two-phase research project monitoring the effectiveness of the partial application of credit law protections to BNPL lending. While regulatory reforms introduced in September 2024 did increase oversight of the sector, our findings show they have not prevented harm - particularly for borrowers who experience financial hardship.

The research found that many BNPL users continue to face unaffordable repayments, escalating late fees, and compounding financial stress. In practice, current settings allow consumer harm to persist even where providers are nominally regulated.

The report recommends several changes to better protect consumers, which are strongly echoed by FinCap and Consumer NZ:

• introduce affordability assessment requirements for ‘buy now pay later’ lending
• reverse changes so that ‘buy now pay later’ lenders are prohibited from charging unreasonable late fees
• apply credit law protections to other lending like phone handset lending and in store payment schemes that have late fees

These changes are best actioned by the FMA, as they assume new powers when the Credit Contracts and Consumer Finance Amendment Bill passes.

Overall, the research shows that New Zealand’s consumer protections remain weaker than those in comparable jurisdictions such as Australia and the UK, and that stronger regulatory settings are needed to prevent further harm.

Unaffordable debt from consumer protections gaps will continue to harm people who face unreasonable debt collection for years to come. While we wait for FMA to assume new powers, FinCap calls for action from parliament to require licensing for debt collectors. We need the FMA to have better oversight of debt collectors’ conduct so they can all be held to the rules.

Read Phase two of the full report and short summary on Consumer NZ’s website: Better protection for Buy Now, Pay Later users.

FinCap thanks Consumer NZ, The Borrin Foundation, the financial mentors who participated in focus groups and especially the researchers at Victoria University Te Herenga Waka.

We welcome your engagement on the findings and recommendations outlined in the report. For further discussion of the impacts of BNPL on financial hardship and the regulatory changes needed please see the contacts below.

Media enquiries:
Katie Brannan, FinCap
027 258 1803 | media@fincap.org.nz

Policy insights
Jake Lilley, FinCap
021 0236 3233 | jake@fincap.org.nz