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Elepay, a “buy now, pay later” (BNPL) service for property owners, has successfully completed an independent review following an order from the Australian Securities and Investments Commission (ASIC).
On 20 September 2024, Elepay received an “all clear” from ASIC, with the government agency’s senior investigation team citing the independent expert’s findings that further inquiries are necessary, and that no compliance breaches occurred.
Founded in 2019, the Elepay platform exclusively serves Australian property owners, allowing customers to defer upfront property-related expenses and quickly access BNPL funds and short-term loans for purposes such as making deposits on new properties or financing construction projects.
This audit and reporting process involved the examination of nearly 4,000 files from the past three years by an independent expert, and was performed under the terms of the government’s Customer Experience Unit (CEU) to assess Elepay’s compliance.
Speaking on this outcome, CEO and founder of Elepay, Gino De Pasquale, expressed satisfaction and said: “It has been a top priority for us to build robust systems and processes that ensure compliance with regulatory and consumer protection laws.”
“While I was always confident in our governance and compliance, I’m certainly relieved that we have received the ‘all clear notice’ from ASIC,” he said.
This review was initiated by ASIC in February 2024, after Elepay admitted it failed to create target market determinations (TMDs) for seven of its credit products distributed to consumers between 5 October 2021 and 15 March 2023, totalling $13.748 million distributed to 1,658 retail clients.
Elepay’s products are classified as financial products under the design and distribution obligations (DDO) of the Corporations Act, which required the company to create TMDs for its financial products before offering them to consumers.
As a result, ASIC raised concerns that Elepay may have exposed consumers to unsuitable financial products and lacked the necessary compliance systems and controls to meet DDO requirements.
In response, Elepay established TMDs for its products on 15 March 2023, and offered to partake in an independent review to assess:
- Whether Elepay’s clients who received one of its products after 5 October 2021 were within the target market of clients identified in the TMDs.
- The fees and charges paid to Elepay by clients who fall outside the target market specified in the TMDs.
- Whether Elepay’s TMDs complied with DDO requirements, and if not, the necessary remedial action.
With Elepay’s CEU audit being completed in only six months, the CEO noted that the company’s “focus on cooperation and supplying all the data and reports to our independent expert from the outset has paid off”.
Looking back on the process, De Pasquale commented that while the CEU audit was an “intense period of scrutiny”, it nonetheless allowed for “valuable opportunities for growth and reflection”.
“Like most things in life, when you’re made to reflect and critique, as we were during the ASIC CEU process, there’s always room for growth and re-evaluation.”
“Over the past eight months, we’ve taken every opportunity to re-evaluate our business and identify areas where we can go from good to great,” he concluded.
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