FlexiGroup “welcomes” ASIC report into buy-now-pay-later sector
A report by ASIC into the burgeoning ‘buy now pay later’ sector has found there are potential risks for customers, but an ASX-listed owner of two of the platforms is welcoming the spotlight.
FlexiGroup (ASX:FXL) is the owner of Certegy Ezi-Pay and Oxipay, which it says makes up about 20 per cent of its customer base. The two providers were among the six that ASIC looked into.
Buy-now-pay-later arrangements allow consumers to immediately purchase products or services but defer payment over a set period of time, usually without interest.
Afterpay (ASX:APT) is perhaps the best known, operating in Australia, New Zealand and the United States. It debuted on the ASX in July last year and has a market cap of $2.9 billion.
FlexiGroup shareholders were pleased to see a response from the company, pushing the shares up five per cent to $1.49.
Yesterday, ASIC detailed its findings on the buy-now-pay-later sector, saying that the number of consumers using such services has increased five-fold to two million since 2015, while the number of transactions per month has risen 3,700 per cent since April 2016.
At June 30 this year, there was $903 million in outstanding payments.
ASIC commissioner Danielle Press said there was danger of consumers becoming financially overcommitted and saddled with late fees.
“Although our review found many consumers enjoy using buy-now-pay-later arrangements and plan to continue using them, there are some potential risks for consumers in using these products,” she said.
“The exponential growth in this industry, along with the risks we have identified, means this will remain an area of ongoing focus for ASIC. One area we will be targeting is where consumers are paying more than they need to for using a buy now pay later arrangement.”
FlexiGroup said it “supports the observations and findings in that report in relation to areas of better practice and improving the BNPL sector standards to support consumer access to appropriate credit”.
“We are well placed to respond to the matters addressed in the report and continue to improve our products and our customer communications.
“As the consumer’s obligation to repay remains unchanged whether the product is regulated or not, we believe our obligation in ensuring their welfare should be consistent with a regulated product.”
With regards to its Certegy Ezi-Pay and Oxipay platforms, FlexiGroup says it does not all customers to make additional purchases if they are late on a payment and that it has taken “proactive” action on reducing fees.
FlexiGroup booked a full year impairment loss — that is, the accounting loss from writing off an asset — over receivables and customer loans in fiscal 2018 of $66.5m, up 6 per cent on the prior year.