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'Pay later' operators providing large loans without a credit licence

Elepay and Futurerent offer property owners huge lines of credit, and consumer advocates are sounding the alarm.

house on stack of coins with elepay and futurerent logos
Last updated: 20 January 2023
Fact-checked

Fact-checked

Checked for accuracy by our qualified fact-checkers, verifiers and subject experts. Find out more about fact-checking at CHOICE.

Need to know

  • In what appears to be an industry first, 'pay later' providers are offering loans up to $500K to homeowners
  • The catch is that the providers help themselves to a significant portion of future rental income
  • Consumer advocates including CHOICE say the lack of regulatory oversight for these unlicensed businesses poses big risks for their customers

In what appears to be a new frontier for the burgeoning 'pay later' industry, two companies operating without a credit licence are offering property owners loans of up to half a million dollars.

Consumer advocates such as the Consumer Action Law Centre are sounding the alarm about the companies in question, Elepay and Futurerent, whose lack of regulatory oversight means customers who take up their services are left without key consumer protections, including hardship arrangements and complaints-handling obligations.

Unlicensed companies avoid regulation

Elepay, which markets itself as "Australia's Pay Later specialists for property owners", offers customers credit of up to $500,000 on short-term loan arrangements. The company was established by former staff of the buy now, pay later company OpenPay.

Futurerent, which targets property investors, provides up to $100,000 in credit and takes a proportion of a client's future rental income in repayments. When queried by CHOICE, Futurerent denied its product is a loan or a form of credit, even though the money is repaid at a profit.

Both companies have confirmed that they don't hold an Australian credit licence, a regulatory requirement for credit providers that comes with mandatory consumer protections.

Consumers exposed to greater risk

Tom Abourizk from the Consumer Action Law Centre says holding a credit licence ensures oversight by the corporate regulator ASIC. The licensing regime mandates consumer protections, including the right for customers to go to the Australian Financial Complaints Authority (AFCA) if they have a dispute with the lender.

Licence holders must also make hardship arrangements available if a life event makes it difficult or impossible for borrowers to repay on schedule. These protections may not be available to customers of Elepay and Futurerent.

"It certainly seems as though these companies are operating with a disregard for the law and almost using gaps in regulatory oversight. The amounts that they are lending to people can be life-changing amounts of money," says Abourizk.

It certainly seems as though these companies are operating with a disregard for the law and almost using gaps in regulatory oversight

Tom Abourizk, Consumer Action Law Centre

CHOICE head of policy Patrick Veyret says there are far fewer options for redress for customers of unregulated credit providers when there is a complaint.

"We've seen time and time again lenders attempt to design their business model to avoid being regulated. More often than not, these providers market and sell exploitative loans to people. 

"A credit licence is a very basic legal obligation for lenders. Lenders that offer unregulated loans of up to $500,000 should be required to have a licence and abide by safe lending laws," Veyret says.

person signing home loan documents

'Pay later' providers are now targeting property owners with offers up to $500K.

Elepay responds 

An Elepay spokesperson tells CHOICE the company is compliant and operating within the law.  

"Elepay does not require a credit licence to offer its existing suite of products. Elepay has, however, been in the process of applying for an Australian credit licence given the recent expansion of the business and to allow the business to extend its current product offerings. We anticipate this to be completed by mid-2023," the spokesperson says. 

We are satisfied that Elepay is operating ethically, fairly and in accordance with its legal obligations

Elepay spokesperson

The company says despite operating "under the exemptions of the National Credit Act", it has implemented responsible lending practices and standards throughout the business. 

"We are satisfied that Elepay is operating ethically, fairly and in accordance with its legal obligations," the company says.  

Futurerent responds

Futurerent says it does not lend money and is not classified as credit. 

"Futurerent is providing its customers with the flexibility to access their [future] rental income in a lump sum. As such, Futurerent is giving consumers greater choice and liquidity with a purpose-built solution to meet their needs. Futurerent ensures it is not advancing funds to anyone who is in hardship," the company says. 

"Futurerent has a proprietary risk-assessment process that has been proven over almost four years of operation, and stress-tested during the COVID pandemic." 

ASIC raises questions 

Consumer Action Law Centre wrote to ASIC last year asking the regulator to investigate whether Futurerent was providing credit without a licence. 

Despite Elepay and Futurerent both claiming to be exempt from holding a credit licence, ASIC isn't so sure. 

In response to our questions, ASIC says both companies "do not appear to have any specific exemptions from the requirement to hold a licence or be authorised through a licensee". 

We are aware of emerging products operating without an Australian credit licence and we are looking into these to form our own view as to whether or not their operations are caught by our regime

ASIC spokesperson

"I can't comment definitively on whether they would require a licence based on the services and products they offer. However, we are aware of emerging products operating without an Australian credit license and we are looking into these to form our own view as to whether or not their operations are caught by our regime," an ASIC spokesperson says. 

Abourizk says companies that target homeowners could push people into financial hardship. 

"High-cost credit and unregulated unsafe credit products can push someone from a comfortable financial position into financial hardship," he says. 

If you're experiencing financial stress due to outstanding loans or other issues and want to know your options, contact the free National Debt Helpline on 1800 007 007 or visit ndh.org.au.

Editor's note 9/9/24: Elepay obtained an Australian Credit Licence in January 2024.

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Stock images: Getty, unless otherwise stated.