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Australia's Afterpay says some BNPL users told to close accounts, then sold credit cards

Australia's Afterpay says some BNPL users told to close accounts, then sold credit cards

Reutersa day ago

SYDNEY, June 10 (Reuters) - Some customers of Australia's Afterpay have been asked to close buy-now-pay-later accounts to qualify for a mortgage and offered a credit card upon qualification, the BNPL provider said on Tuesday, underscoring fierce competition in the consumer finance sub-sectors.
BNPL loans, on-the-spot interest-free short-term loans with minimal credit checks, exploded as an alternative for younger shoppers after the COVID-19 lockdowns and stimulus payments spurred an online shopping frenzy. Customers are incentivised to pay on time by the promise of maintaining or increasing their borrowing limit.
In a survey of 1,000 of its customers, Afterpay said more than 10% reported being offered a credit card by the same bank or mortgage broker that told them to close their BNPL account to qualify for a loan, without specifying which banks or brokers.
Owned by U.S. tech billionaire Jack Dorsey's Block (XYZ.N), opens new tab, Afterpay leads Australia's BNPL market with more than 3.5 million active monthly users, half the country's total BNPL accounts, according to government figures.
Lenders are required by law to make reasonable inquiries about an applicant's finances but may not give financial advice.
Spokespeople for Commonwealth Bank of Australia, the biggest lender, and No.3 lender National Australia Bank (NAB.AX), opens new tab told Reuters that they did not tell applicants to close their BNPL accounts.
A spokesperson for No.4 lender ANZ (ANZ.AX), opens new tab said the bank assessed BNPL liabilities alongside a person's other finances and "depending on the customer's overall financial position, goals, and objectives, they may choose to restructure or close certain debts – such as BNPL accounts – to support their application".
Afterpay claimed banks were capitalising on a perception of BNPL users as riskier than traditional borrowers to protect a declining lending category.
Australian interest-accruing credit card debt is down 30% in half a decade as borrowers seek cheaper options.
The company added that its survey found BNPL users had credit scores and on-time repayment records broadly in line with credit card users.
The BNPL model has avoided regulation under Australian consumer credit laws so far as it doesn't involve interest. However, "if it looks and acts like credit, then it should be regulated as such," the Australian government had said last year.
New legislation requiring BNPL firms to run credit checks on borrowers kicks in on Tuesday, which, Afterpay's Head of Public Policy Michael Saadat hopes, would improve transparency around user creditworthiness.
The main reason Afterpay customers close their accounts is because their lender or broker told them to, and "this should not be something that is driven by misperception of the regulatory requirements," Saadat told Reuters in an interview.
According to mortgage broker AFG, (AFG.AX), opens new tab one in 10 Australian mortgages are arranged by brokers. Mark Hewitt, general manager of industry and partnerships at AFG, said the company does not distribute credit cards but responsible lending rules require it to "ensure adequate enquiry is made around an applicant's ability to meet their financial commitments".

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Cheaper imported chicken and beef increasingly seen in UK supermarkets
Cheaper imported chicken and beef increasingly seen in UK supermarkets

The Guardian

time2 hours ago

  • The Guardian

Cheaper imported chicken and beef increasingly seen in UK supermarkets

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Aussie home builder collapses after being swamped with more than $12million worth of customer claims over alleged building defects
Aussie home builder collapses after being swamped with more than $12million worth of customer claims over alleged building defects

Daily Mail​

time3 hours ago

  • Daily Mail​

Aussie home builder collapses after being swamped with more than $12million worth of customer claims over alleged building defects

A Sydney construction firm has gone into voluntary administration following mounting pressure arising from $12.9million in building defect claims. Family-run J & CG Constructions has been in operation since 1994 and built apartment complexes, offices and commercial spaces until the company was placed into administration in May. According to documents filed with ASIC, Sean Wengel and Rashnyl Prasad of William Buck have been appointed as joint administrators. The ASIC filing follows legal action in both the NSW Supreme Court and the NSW Civil and Administrative Tribunal (NCAT). In total $14.9million is owed to creditors, with the vast majority tied to construction defect claims. Company director Mark Guerreiro said the business was unable to survive the financial burden, the administrators wrote in their report. 'The director considered that the scale of the claims, along with the legal costs expected to defend them, exceeded the company's financial capacity and rendered the business no longer viable,' the report stated. The largest claim stems from the Rising Apartments development on Botany Road in Mascot, a 44-unit complex completed in 2017. Owners at the Mascot building allege defects collectively worth $11.9 million, with an independent 2019 inspection uncovering 'potentially major defects related to the rooftop waterproofing' along with several minor issues. That matter remains before the NSW Supreme Court. A second legal action was launched in December by owners of a 15-apartment and two-commercial-lot property on Norton Street in Leichardt, who are seeking $606,820 in compensation for alleged construction faults identified in 2023. Administrators say more defect claims are under review, and the final total could increase as complex matters are resolved. J & CG Constructions had stopped taking on new projects in the 2024–2025 financial year, choosing instead to focus on existing contracts and warranty-related claims. Despite these efforts, the business saw its income plummet, from $15.4 million in FY2023 to just $581,000 in FY2025. It also faced a string of financial setbacks, including a $550,000 hit from SafeWork fines and legal costs, and an additional $250,000 loss from invoice fraud. In FY2025 alone, the company recorded a $704,000 loss, following a $1.9 million loss the year prior. Administrators noted that the company's continued operations had been propped up by Mr Guerreiro personally funding its working capital. 'The company remained able to trade and meet obligations prior to this period only because the director personally funded working capital needs,' the report said. However, the looming $11.9million claim from the Mascot development 'would place the company into an insolvent position he could no longer support,' the report concluded. Mr Guerreiro was also listed as a director of related entities J & CG Con, J & CG Group, and J & CG Fitouts. Administrator are pursuing a deed of company arrangement rather than liquidation which would see Mr Guerreiro put in $100,000 of his own money and creditors would receive 0,68 cents to the dollar.

Tobacco excise isn't making Australians smoke less and should be frozen to curb black market, economists say
Tobacco excise isn't making Australians smoke less and should be frozen to curb black market, economists say

The Guardian

time3 hours ago

  • The Guardian

Tobacco excise isn't making Australians smoke less and should be frozen to curb black market, economists say

Economists say the tobacco excise rate is too high, is not lowering smoking rates and should be frozen or even 'radically' reduced as a way to address the soaring black market trade in cigarettes. It comes ahead of a meeting of state and federal health ministers on Friday and after the NSW premier, Chris Minns, last week demanded the Albanese government cut the excise rate to combat an explosion in black market tobacco and an associated rise in organised crime. In Victoria a rash of firebombings have underlined the policing challenges associated with the illegal cigarette trade, with the state's Labor government also calling for a cut to the excise rate, which has tripled over the past decade – making Australian cigarettes the most expensive in the developed world. 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Sign up for Guardian Australia's breaking news email Over the past decade, the excise rate per cigarette has tripled from 46c to $1.40. The excise now accounts for $28 of the average $40 price for a packet of 20 cigarettes. For some time a rising tax was associated with the twin benefits of falling smoking rates and rising revenue, but after peaking at $16.3bn in 2019-20, federal excise receipts have plunged. The March budget forecasts tobacco excise receipts will be just $7.4bn in this financial year – the lowest since 2012-13 – and will continue to fall to $6.7bn by the end of the decade. Rather than a sudden collapse in smoking rates, experts point to an explosion in the availability of black market tobacco in recent years. An equivalent of 605.8m cigarettes in illegal tobacco was seized at the border in 2019-20, according to government figures. By 2022-23, border seizures had reached the equivalent of 2.6bn cigarettes before easing to 2.2bn in 2023-24. 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' Holden said it would take more than a 'tweak' to the excise rate to remove the incentive to buy and sell illegal tobacco, suggesting a radical excise reduction for two years. The excise rate increases twice a year, in March and September, in line with the rise in a measure of wages called the average weekly ordinary time earnings. On top of this indexation, the tobacco excise is also climbing by an extra 5% a year for the three years to September 2026. As a share of income, cigarettes are nearly four times more expensive than they were three decades ago.

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