The ASX-listed company informed shareholders that Barry Kogan, Jonathan Henry and Rob Smith of McGrathNicol had been appointed as receivers of the business, rendering them control of all assets and operations on 4 February 2023.
Customers (myself included) were informed they would no longer be able to use Openpay for new purchases, but any outstanding debt must be paid.
In a letter to “valued customers”, OpenPay said: Whilst Openpay will cease providing new plans from this point forward, please note that you are required to continue to meet all existing payments as per your agreement.
“The Openpay app, website and repayments will continue to operate as normal to process your payments.”
It is expected that the shares in the company will continue to be suspended until further notice while the assessment of the appropriate strategy is ongoing.
Government pushes more increased regulations
The recent fintech collapse followed calls for more regulation surrounding the industry on the back of the federal government’s buy now, pay later in Australia options paper.
The consultation paper stated that it believes BNPL products should be regulated under the National Consumer Credit Protection Act 2009 (the Credit Act).
According to the Reserve Bank of Australia’s Payments System Board, there were approximately 7 million active BNPL accounts in the financial year 2021–22 and $16 billion in transactions, an increase of approximately 37 per cent on the previous financial year.
However, BNPL products and providers of BNPL products are not required to hold an Australian Credit Licence as they fall under exemptions included in the Credit Act.
The consultation process has now closed and a government decision on three regulatory intervention options is yet to be decided.
- Option 1: Strengthening the BNPL industry code plus an affordability test, which would impose a “bespoke affordability assessment” for BNPL providers
- Option 2: Limited BNPL regulation under the Credit Act — this would require BNPL providers to obtain and maintain an ACL, plus introduce modified responsible lending obligations (RLOs)
- Option 3: Regulation of BNPL under the Credit Act with full RLOs. This option would treat BNPL products similarly to other credit products regulated under the Credit Act and require BNPL providers to comply with regulations such as the RLOs
The Mortgage & Finance Association of Australia (MFAA) has called for full regulation under the Credit Act and more education around BNPL for consumers, citing concerns broker members had observed BNPL can “act as a barrier or casue delays” in seeking credit.
[Related: MFAA calls for BNPL to be regulated]