The Senate committee on Australia’s buy now, pay later (BNPL) lenders handed down its decision on Friday evening.

And in response, it got no arguments at all from the companies in the firing line.

Markets were just as chuffed, as shares in all of the BNPL competitors rocketed higher in morning trade.

Afterpay (ASX: APT) is up over 14 per cent at 19.68, while Zip Co (ASX: Z1P) rose 7.64 per cent to $1.55. The recently-listed Splitit (ASX: SPT) is up 10 per cent at 82 cents, with FlexiGroup (ASX: FXL) up 2.4 per cent at $1.17.

Credit checks

Ahead of the Senate decision, the focus was on whether the committee would enforce the implementation of stricter credit checks, similar to the standards imposed on a bank.

But the ruling stopped short of an express instruction. Instead, it recommended the introduction of a sector-specific regulatory framework.

And both Afterpay and Zip Co  — the two biggest players in the space — said they were happy to participate. Here’s Afterpay:

“If adopted by the Government, Afterpay looks forward to working with ASIC, the Government, consumers and industry on a suitable regulatory framework and to achieve the best possible outcomes for consumers.”

Those sentiments were closely echoed by its biggest competitor in the Australian market, Zip Co:

“Zip looks forward to continued engagement with Government and ASIC on any new legislation, and other industry participants to form an industry code of practice. We fully support regulation that strengthens community confidence in the BNPL sector, fosters Australian fintech innovation and protects consumers from harm.”

We’re the good guys, we promise

Both companies also touted the benefits of their existing consumer-protection infrastructure in their response to the report.

Afterpay said it sets low payment limits for new customers, and its pay-instalment system ensures people pay at least 25 per cent of the total amount owed up front.

Zip Co highlighted that it actually does perform a credit assessment check on new customers. However, the Senate committee ruling ensured that no companies in the sector will be subject to the stricter criteria enforced under the National Credit Act.

And in responding to the Senate, neither company could resist taking a shot at their competitors in the sector.

Here’s APT addressing the issue of late fees on its platform:

“Our late fees are proportionate to our costs, unlike others cited in the Senate committee report. There is no situation where a $200 debt could be extended for 12 months that include monthly fees of $72, or 35 per cent of the purchase value.”

Afterpay’s income from late fees raised some eyebrows in the 2018 financial year when it increased to almost 25 per cent of total revenue.

And by Zip Co’s assessment, it does things differently:

“Zip’s business model does not rely on late payment fees or customers not being able to afford their repayments to drive revenue,” it says.

Stockhead has asked new player Splitit for comment on the Senate’s findings.

The company listed on the ASX at the end of January and risen by more than 400 per cent from its listing price of 20 cents.