Fintech Humm was slapped with an interim stop order by ASIC on May 25 from issuing its BNPL product for a period of 21 days, due to deficiencies in Humm’s target market denomination (TMD).
Just a day after, the order was revoked after Humm applied immediate corrective action to address the design and distribution obligation (DDO) deficiencies identified by the regulator.
The Humm stop order intervention and corrective action came following ASIC’s completed targeted review of BNPL compliance with their DDO.
Using Humm’s BNPL product, consumers can borrow up to $2,000 for “little things” or up to $30,000 for “big things.” It also offers access to a feature allowing consumers to use the product to defer the payment of bills.
In a statement, ASIC said it was concerned that the TMD for Humm’s BNPL product was deficient in a number of key areas.
First, it failed to appropriately define the target market, nor did it specify details about the product’s bill payment feature, or the financial situation of consumers who intended to use this feature to pay bills.
Second, the TMD did not specify details of how Humm, or its distributors, would assess whether a consumer meets the product’s eligibility criteria, and also failed to explain how Humm's origination and application processes would ensure that the product was likely to reach its target consumers, ASIC said.
Finally, Humm’s TMD did not include specific review triggers to monitor consumer outcomes in relation to consumers missing payments.
In response to ASIC concerns with Humm’s TMD, the fintech scrapped the bill payment feature from the product and amended its TMD by:
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