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The payday lenders, debt management firms as well as buy-now-pay later are some of the companies which were carrying out the operations without any regulations. The uncertainty prevails in every business. When things do not go as per the expectations by the customers, which is often the case, the consumers are not able to lodge a complaint with the new AFCA or Australian Financial Complaints Authority as they might have lodged if they were dealing with the banks. The primary reason for this is that it is not mandatory for these companies to join up.
A parliamentary inquiry was called up in the previous month by the Australian Labor Party, so that some light can be thrown on the financial services space which is becoming problematic. In the last month, when the inquiry was announced, the stock prices of Afterpay Touch Group Limited  (ASX: APT) and FlexiGroup Limited (ASX: FXL) witnessed the negative momentum. The submission which was done by Consumer Action Law Centre or CALC stated a large number of problems and the steps which needs to adopt so that those problems can get fixed. As per the submission, the services of buy-now-pay-later are witnessing robust momentum at a time when the Australian people are having elevated household debt levels.
The pawnbrokers and others should not be given the exemption with respect to the consumer credit regulation. The exemption would mean that there no need for these companies to analyze the loan suitability which includes the repayments affordability. That means there is no requirement for these companies to give hardship assistance. If the loophole gets closed, it could impact the operations of these companies which are in the business of making money by targeting the vulnerable customers which includes welfare recipients as well as teenagers.
However, Afterpay is of the view that since customers have lost their trust in the banks because of the misconduct done by the banks, the new generation of the customers is relying on the new generation of the financial services. As per the CALCâs casework, people are having the buy-now-pay-later debts are also having other debt liabilities like payday loans as well as credit cards. The terms of the Royal Commission do not extend to the debt management firms. These firms operate by targeting the people which are undergoing financial trouble, and they do so by using the TV commercials.
The ASIC or Australian Securities and Investments Commission published the report which covers the debt management firms in the year 2016. The report stated that this sector is carrying out the business activities on opaque fees as well as expenses. The report also stated that largely fees are high, and these fees need to be paid upfront.
On November 12, 2018, the stock price of Afterpay Touch Group Limited has witnessed the negative momentum and ended the session on a weaker note. The stock ended at A$12.500 per share which implies that it has fallen A$0.990 per share or 7.339%.
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