A review of the Buy Now Pay Later Credit Code will focus on whether the code contains provisions that achieve broadly comparable consumer outcomes to the provisions of the National Consumer Credit Protection Act and what, if any, are its shortcomings in consumer outcomes.

The Australian Finance Industry Association has released a consultation paper setting out the issues for its review of the Buy Now Pay Later Code of Practice and has called for submissions by December 9.

The review is being led by consultancy Promontory Australia, which will report next March.

The code came into effect in March last year and has nine signatories. The AFIA estimates that code signatories account for 95 per cent of BNPL business in Australia.

The rationale for the review is that the industry is developing rapidly and for the code to be effective it must adapt to changes in market conditions.

Promontory will look at the level of consumer understanding of the code and the protections it offers, the provisions in the code compared with credit legislation, the process for monitoring compliance and whether the code has enhanced consumer protection.

It has asked for comments on a range of questions, including whether the code provisions that relate to dealing with vulnerable customers are sufficiently clear and specific, and whether the requirements for ensuring consumers are adequately informed about product terms are up to scratch.

It also wants to know whether members’ complaints handling procedures are effective, whether customer credit assessment processes are clear and effective and whether standards for merchants and retail partners are appropriate.