New legislation could net Afterpay, but nothing can spoil the party

As Afterpay’s share price rose 37.8 per cent over the past few three trading days on positive US expansion figures, the Treasury Department on Friday quietly released draft legislation that could bring the Australian operations of the soaring no-interest lender under the regulation of ASIC.

Strangely though, the only group that appears to have noticed is the Consumer Action Centre. It put out a press release on Friday applauding the new legislation, which it said would target “unregulated short-term credit like buy-now pay-later”, the sector in which Afterpay is the most successful provider.

The legislation, which will now go through a period of open consultation, proposes to formally institute a recommendation of the Financial System Inquiry that called for a product intervention power be given to ASIC allowing it to intervene when there is a significant risk of consumer detriment (as opposed to the current system, which allows it to get involved after the case). The government proposes to allow ASIC to use this power broadly, including over products ASIC doesn’t currently regulate that are “functionally similar irrespective of the legal basis on which the provider offers those products”. Short-term credit (that less than 62 days, or two months in duration) is explicitly given as an example of such products.

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Source: New legislation could net Afterpay, but nothing can spoil the party | afr.com