The ASX’s buy now pay later stocks fluctuated wildly this week as a Senate committee released its final report into the sector.

Behemoth Afterpay Touch (ASX:APT) and small caps Zip Co (ASX:Z1P), Splitit (ASX:SPT) and FlexiGroup (ASX:FXL) are the key listed companies past of the sector, which allows customers to purchase items without paying full price; they repay in instalments.

The Economics References Committee released its report into the impact on individuals, communities, and the broader financial system of buy now pay later models.

The report stated that “clearly, more needs to be done to ensure consumers are protected” and called into question whether providers’ algorithms were doing enough to prevent consumer financial hardship.

It handed down a number of recommendations to improve the sector: greater regulation of marketing of the services, that the sector develop an industry code of practice and intervention power currently proposed in the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018 legislation be extended to cover buy now pay later products.

Overall, it argued that it should be more regulated, with regulation to ensure the following:

  • Before credit is extended, providers appropriately consider consumers’ personal financial situations;
  • Consumers have access to internal and external dispute resolution mechanisms;
  • Providers offer hardship provisions;
  • Products are affordable and offer value for money; and
  • Consumers are properly informed, prior to entering into agreements, about their terms and conditions.

The listed companies in the sector will now also be part of an ASIC investigation, with irregular trading in the past week raising concerns the businesses involved might have been privy to information not known by the market.

“There was no general announcements that proceeded this drop,” ASIC commissioner Cathie Armour told the Australian Financial Review.

“There was a price drop [in Afterpay]. That has come to our attention. There were similar drops in Zip Pay and Flexi Group. We are looking at those.”

Trading across Afterpay (ASX:APT), Splitit (ASX:SPT), FlexiGroup (ASX:FXL) and Zip Co (ASX:Z1P) this week.

Both Afterpay and Splitit lost value compared with the start of the week, while FlexiGroup and Zip Co made small gains.

But as you can see in the graph and the table below, all four experienced wild fluctuations.

All companies should release statements in response to the report on Monday.

ASX code Name Last price Market cap Week high Week low 1W Tot Ret
APT Afterpay $17.11 $4.1b $19.18 $16.75 -10%
Z1P Zip Co $1.44 $404.8m $1.44 $1.28 1%
SPT Splitit $0.76 $204.5m $0.86 $0.70 -12%
FXL FlexiGroup $1.14 $427.6m $1.17 $1.10 4%
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