«Should evidence come to light that the committee’s deliberations have been disclosed, the committee will use those procedures to investigate the matter,» it said.
ASIC continues to look into the unusual trading patterns that may have been sparked by calls to analysts that reminded them that the Senate inquiry report was about to be released and an earnings slump for fellow rapidly growing firm WiseTech.
The Labor-led Senate inquiry made 20 separate recommendations for the small credit sector including: removing point of sale exemptions from the National Consumer Credit Protection Act, forcing small credit providers to act in the best interests of their clients and be members of the Australian Financial Complaints Authority.
But the committee stopped short of recommending Afterpay and its competitors be forced to conduct costly responsible lending checks on consumers under the National Credit Act, a move lobbied for by a coalition of consumer groups and the big banks.
It said buy-now-pay-later providers should provide access to dispute resolution mechanisms, provide hardship provisions and ensure consumers are properly informed by terms and conditions.
The committee recommended that Treasury product intervention powers — which give regulators oversight — be extended to cover buy-now pay-later products.
It praised Afterpay and rival Zip for providing evidence to the inquiry.
«There is no guarantee, however, that future entrants to the sector will take a similar approach,» the committee said.
Afterpay has a market capitalisation of $4 billion and a share price that has grown by 58 per cent over the past year. It is available in thousands of stores including big departments stores such as Big W and David Jones.
The number of consumers using buy-now-pay-later products increased from 400,000 to approximately 2 million between 2015 and 2018.
«This growth has largely outstripped the regulatory response,» the committee said.
ASIC noted that over 40 per cent of users had incomes of under $40,000, and of this group, almost 40 per cent were either students or in part-time work
Afterpay co-founder Anthony Eisen said the report was a considered and thorough response to the industry.
“Afterpay supports the recommendations relevant to the buy now pay later sector and believes the recommendations are sensible, appropriate and stand to provide additional protections for vulnerable Australians,» he said.
The committee was scathing of pay-day lenders and consumer lease providers and warned individuals with multiple payday loans were also likely to be caught by using buy now pay later products.
The committee was provided with hundreds of examples of illegal behaviour in small and medium credit and consumer leasing, suggesting widespread noncompliance.
«While most of the products examined in this inquiry were outside the ambit of the banking royal commission, there is every reason to believe that the same misconduct, or worse, prevails in the market for small credit products,» the committee said.
It heard evidence of consumers with 30 Cash Converters loans in the past four years and pay-day loans pushing people into a spiral of debt with annual interest rates of between 112 per cent and 407 per cent.
«The worst case studies presented to this inquiry concerned marginal credit products such as payday loans and consumer leases,» the committee found. «These providers have gone largely unchecked for too long.»
With Colin Kruger
Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.