Afterpay shares dived following news that payday lenders, debt management firms and buy-now-pay-later platforms will be the subject of a new Senate inquiry.
The inquiry, proposed by Labor, is likely to pass the Senate after receiving support from the Greens, independent Derryn Hinch and Centre Alliance senators Rex Patrick and Stirling Griff.
“Financial counsellors are telling us that their clients are coming in with increased debts, as a result of predatory debt-management firms and other unlicensed financial services providers,” said Labor’s Jenny McAllister.
Consumer groups said the “debt vultures” often exploit consumers struggling to get loans from conventional sources, and operate with no regulation. “If you think the banks, insurers and superannuation funds are ripping people off, they are nothing compared with the exploitative conduct of this sector of the marketplace,” said Gerard Brody, chief executive at the Consumer Action Law Centre.
Afterpay shares have performed well this year, soaring 90 percent since January.
Falling 19 percent to $11.35, Afterpay was not the only financial company to get hit with the news. Cash Converters shares were down 12 percent to 26 cents, Money3 dipped 14 percent to $1.7, and Zip Co fell 12 percent to 93 cents.