Consumer fintech FelixGroup (ASX: FXL) – rebranding under its BNPL name, Humm – has scored a major victory over the Australian Competition and Consumer Commission (ACCC) in the fight for a slice of the renewable energy sector by buy now, pay later providers.
The Australian Competition Tribunal issued a summary determination today rejecting the consumer watchdog’s plans for tougher scrutiny of BNPL consumer lending for household solar installation.
FlexiGroup has been a key player in the take up of household solar power, financing around 10% of all solar installations (210,000) , but was facing pushback from the consumer watchdog, which was insisting that energy tech suppliers using interest-free finance to sell solar systems apply the responsible lending provisions under Australian credit law, with the ACCC also pushing for additional safeguards as part of what’s known as the New Energy Tech Consumer Code (NETCC).
The ACCC handed down an ruling in December 2019 with conditions that strengthened consumer protection requirements for BNPL providers, and banned offering BNPL finance for unsolicited sales. The NETCC requires signatories to meet minimum standards of good practice and consumer protection in relation to the marketing, distribution and financing of new energy technology (NET) products and services.
The code of conduct is a form of industry self-regulation developed by the Australian Energy Council, Clean Energy Council, Smart Energy Council and Energy Consumers Australia, which opposed the ACCC’s additional conditions.
FlexiGroup led the charge against the voluntary code at the Australian Competition Tribunal, alongside the energy tech suppliers.
The tribunal backed unregulated consumer credit on the basis that it delivers economic benefits and in general doesn’t harm consumers except when “caused by poor or unlawful selling practices”. Any harm, it concluded, could be reduced by the consumer protections contained in the Code.
This decision means its business-as-usual for Humm and other BNPLs in the NET sector. Consumers pay between around $4000 and $10,000 to install solar in Australia.
The summary tribunal’s determination was welcomed by former Macquarie banker turned consumer renewable energy financier Katherine McConnell, founder and CEO of Brighte.
Flexigroup CEO Rebecca James said they supported the NETCC’s intent of increasing consumer protection, saying less than 1% of Humm customers had experienced any hardship or default
“We also note that as a direct result of Humm’s participation before the Australian Competition Tribunal, a reasonable transitional period has been granted to NET providers, including our valued merchants, to adopt any necessary changes,” she said.
“The decision recognises the importance and popularity of BNPL as a way to finance new energy technologies. BNPL increases competition and has been meaningful in driving the adoption of green energy solutions, benefiting consumers and the environment. It is the simplest and cheapest form of finance, offering consumers the swiftest payback on their investment.
ACCC Commissioner Stephen Ridgeway said the varied conditions also remove the Code administrators’ ability to impose mandatory standards on signatories that would apply to future new energy tech products and services.
“The New Energy Tech Code aims to provide consumers with added protections and more information to help them make better informed decisions around what can be complex, expensive purchases,” he said.
“The ACCC considered that the option to choose ‘buy now pay later’ finance was valued by consumers but that, based on the submissions made to the ACCC, greater protections around responsible finance and a prohibition on ‘buy now pay later”’ finance being offered in unsolicited sales of new energy tech were appropriate to reduce the risk of harm to consumers from entering into unsuitable or unaffordable finance arrangements.”
The Tribunal noted that ASIC is currently looking at whether the National Consumer Credit laws should be extended to cover BNPL finance and that ASIC’s review of the sector will have more evidence before it to consider whether additional regulation is warranted.