Stronger compliance requirements create both clarity and complexity for brokers
Buy now, pay later (BNPL) services in Australia now fall under a tighter regulatory regime, bringing them in line with traditional credit products like credit cards – a change that marks a major shift for mortgage brokers, who will gain greater visibility into clients’ financial obligations — but not without new challenges.
Under the updated framework, all BNPL providers must now hold an Australian Credit Licence and be members of the Australian Financial Complaints Authority (AFCA). They must also adopt either standard or modified responsible lending obligations and adhere to stronger credit reporting requirements.
For brokers, this means BNPL products are no longer operating outside the regulatory net, the Mortgage & Finance Association of Australia (MFAA) said. Licensed providers will need to conduct credit assessments for new accounts or increases in limits, offering a clearer picture of a client’s total debt load.
One of the most significant updates for brokers is the requirement for BNPL providers offering products over $2,000 to participate in the credit reporting system. By signing the Principles of Reciprocity and Data Exchange (PRDE), these providers will both access and contribute BNPL data to credit reports.
For the MFAA, this is a long-awaited win for brokers, many of whom have argued that BNPL is a credit product in practice and should be treated as such in serviceability checks. The change is expected to streamline brokers’ assessments by providing fuller, more accurate credit data.
However, smaller BNPL facilities – those under $2,000 – are not covered under the same reporting rules. Brokers will still need to use workarounds such as bank statement analysis or direct client disclosure to uncover this type of debt.
The Australian Retail Credit Association (Arca) is actively encouraging BNPL providers to report across the board, regardless of facility size – a move brokers are likely to support.
The reforms also put pressure on BNPL providers to improve consumer education. Many borrowers remain unaware that BNPL impacts their credit profile, and that missing repayments can have long-term consequences.
“BNPL providers must be licensed, must conduct an assessment for new facilities or top-ups, and be a member of AFCA,” the MFAA said, adding that mortgage brokers are well-positioned to reinforce these messages during client interactions — particularly when preparing a loan application. By highlighting how BNPL usage can affect serviceability and loan outcomes, brokers can help clients make better credit decisions.
Tools such as CreditSmart offer consumer-friendly resources that brokers can point clients to for further guidance.
Brokers should also be aware that BNPL providers are now required to have formal processes in place to support customers in financial hardship. They must also report accounts that are significantly overdue, providing another layer of transparency for brokers reviewing credit histories.
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