As households come under pressure from rising interest rates and inflation, business regulators are eyeing companies that buy now, pay later, and offer quick cash.
The Australian Securities and Investments Commission is also fighting over risky cryptocurrency products being flogged by retail investors.
“This will not be tolerated and action will be taken,” chairman Joe Longo warned Thursday.
“We are seeing issuers promoting risky products as suitable investments that make up a significant portion of an individual consumer’s investment portfolio.”
Turning to lending, Longo notes that the current tight market is putting pressure on consumers, with many turning to “fringe” outfits.
“Some people are looking to marginal credit sources that can be harmful,” he said at ASIC’s annual forum in Sydney.
“Some consumers are facing hardships and delinquency.”
ASIC scrutinizes potentially harmful and predatory credit products and peripheral lending practices.
“Our targeted credit … surveillance work is focused on credit cards, buy-now-pay-later products, and low-value credit contracts,” he added.
Protecting consumers is a top priority, and regulators have said they will not hesitate to impose severe penalties or take legal action against lenders seeking to exploit financial vulnerabilities. rice field.
Demand for buy-now-pay-later services such as Afterpay and Zip may have slowed in the September quarter, but sales are down 10% year-over-year, according to Equifax research released late last month. increasing in the near future.
Most of the sales growth was due to a post-COVID-19 consumer surge, with more people shopping in stores instead of online.
“Consumers are shopping more in ‘physical stores’ this year compared to Q3 2021, choosing different payment options when shopping in person versus online. ,” said Kevin James, general manager of Equifax.
Australian Bureau of Statistics figures last week showed retail sales rose 19.2% for the year to August, a record high.
While some of the surge was due to consumer activity, economists noted that rising costs of goods were also part of the sales story.