Corporate regulator ASIC has officially accepted a court-enforceable undertaking from BNPL provider Elevare Pay Easy, trading as Elepay.
The undertaking came in response to Elepay’s failure to comply with the design and distribution obligations (DDO) of the Corporations Act.
Elepay, known for offering funding to property owners for various property preparation expenses, including home improvements and renovation, design, and marketing, has admitted to not having target market determinations (TMDs) for seven credit products distributed to consumers between Oct. 5, 2021, and March 15, 2023.
During this period, Elepay lent a total of $13.748 million to 1,658 retail clients.
The DDO mandates financial institutions to create TMDs ensuring products are sold only to the target market and are suitable for their needs and objectives.
“ASIC is concerned that Elepay’s failure to make TMDs exposed consumers to the risk of obtaining a financial product that was inappropriate to their needs and objectives,” ASIC said in a media release.
ASIC also noted Elepay lacked the necessary compliance systems and controls to adhere to the DDO during the specified timeframe.
To address these concerns, Elepay has voluntarily offered and ASIC has accepted an undertaking.
The key provisions include engaging an independent expert to assess whether Elepay’s clients who received products after October 5, 2021, were within the TMD-identified target market. The expert will also evaluate fees and charges paid by clients falling outside the TMD-specified target market.
Elepay must notify clients outside its TMD immediately, cease charging them fees, and refund any fees or charges already paid.
During the period in question, Elepay did not hold an Australian credit license. However, following ASIC's investigation, Elepay applied for and was granted an Australian credit license on Jan. 23.
For more details, you can view the Court Enforceable undertakings register.
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