The Singapore FinTech Association (SFA) and eight industry players have launched a code of conduct that outlines the best practices to protect consumers in the city-state against over-indebtedness.
Among others, the code of conduct states that customers cannot have over S$2,000 in outstanding payments with a “buy now, pay later” (BNPL) provider, unless they pass an additional credit assessment.
BNPL providers are also required to suspend a customer’s access to their services if payment obligations are not met.
The working group was formed by SFA in March under the guidance of the Monetary Authority of Singapore (MAS). Members include BNPL providers such as Atome, Grab Financial Group, and ShopBack.
“The BNPL Framework will mitigate risks of consumer over-indebtedness, ensuring that BNPL offerings will have a positive impact on Singapore consumers, as well as continue to benefit the ecosystem,” the working group said during its formation in March.
BNPL solutions available to Singapore consumers have increased in recent years, alongside wider merchant adoption. Industry players offer potential benefits, which include the improvement of financial inclusion for underbanked and underserved segments and the democratisation of credit for the general populace, the working group said.
The code of conduct requires BNPL providers to ensure their advertising and promotional materials are not misleading or deceptive. They also cannot solicit customers aggressively nor market their services to customers who have asked to be excluded from such promotions.
Providers must also be fair and transparent when it comes to their fees. Fee disclosures must be made to customers in a clear manner.
To ensure the enforcement of the code, an independent oversight committee will be formed. The committee will have the power to request for written submission from a provider on suspected violations and remove an accredited provider from the BNPL registry, among others.