The Australian Securities and Investments Commission (ASIC) has accepted a court order from buy now, pay later provider Elevare Pay Easy Pty Ltd, trading as Elepay.
Elepay’s products are financial products under the Design and Distribution Obligations (DDO) of the Companies Act which requires Elepay to carry out a Target Market Determination (TMD) before offering them to consumers.
TMDs ensure that products are only sold to consumers in the target market for that product and that the product is appropriate for their needs and goals.
Elepay admits that from 5 October 2021 to 15 March 2023 it did not have a TMD for seven credit products it distributed to consumers. During this period, Elepay lent $13.748 million to 1,658 retail customers.
ASIC is concerned that Elepay’s failure to build a TMD exposes consumers to the risk of obtaining a financial product that is not suitable for their needs and objectives.
The regulator is also concerned that Elepay did not have the appropriate compliance systems and controls in place to comply with the DDO.
Elepay built TMD for its products on March 15, 2023.
To address ASIC’s concerns, Elepay proposed, and ASIC agreed to accept, an undertaking that it would engage an independent expert to report:
- if Elepay customers issued with one of its products after 5 October 2021 fall within the target market of customers identified in the TMDs;
- the fees and charges paid to Elepay by customers who do not fall within the target market specified in the TMDs;
- whether Elepay’s TMDs comply with DDO requirements and if not, what steps Elepay should take to remedy this.
Elepay must notify customers outside its TMD of the expert’s finding, immediately stop charging those customers any fees and charges, and refund any fees or charges already paid.
From 5 October 2021 to 15 March 2023, Elepay did not hold an Australian credit licence. On 18 October 2023, following the commencement of ASIC’s investigation, Elepay applied to ASIC to obtain an Australian credit licence. On 23 January 2024, ASIC granted a license to Elepay.