Plenti’s buy now, pay later (BNPL) finance option for the installation of residential renewable energy technology such as solar panels and batteries will allow home owners to make over up to 72 interest-free monthly payments.
Customers will be charged a fixed monthly fee of $5.99 for accessing the product with a loan term of between three and six years, while the cost of extending finance is paid by the renewable technology vendor through an upfront merchant fee, as per the arrangement with other merchants providing BNPL, a Plenti spokesperson told Mortgage Business.
The listed lender said it believes that the zero-interest payment plan would “materially” increase the size of its existing renewable energy finance market opportunity due to what it called the “simplicity” of BNPL finance to both vendors and customers.
It also said that the product would allow vendors to offer both interest-bearing and interest-free BNPL finance from within a single point-of-sale portal.
According to the lender, the public launch of the interest-free payment plan has followed a pilot rolled out over the past three months with selected renewable technology partners.
It reported that during this period, solar finance applications through pilot partners have increased by 80 per cent when compared with the average demand in the previous six months.
Plenti said that its decision to launch BNPL finance in the renewables lending segment was spurred by a decision by the Australian Competition Tribunal in September 2020 relating to the provision of finance under the New Energy Technology Consumer Code (NETCC), which is a voluntary code of conduct for suppliers of renewable energy products and services.
Plenti (formerly known as RateSetter) had previously proposed an industry code of conduct for suppliers of new energy technology products such as solar panels and energy storage systems that would have placed a number of restrictions on the ability of suppliers of new energy technology products to offer such credit in relation to the sale of these products.
The code would have prohibited the offer of such credit unless the credit provider implemented procedures “equivalent” to the responsible lending obligations under the national consumer credit laws.
However, in September 2020, after conducting a hearing, the Australian Competition Tribunal concluded that the evidence did not establish that the provision of BNPL finance with new energy technology products created “material consumer harm”.
“It also found that there was substantial detriment in restricting BNPL finance options to consumers and that BNPL was a significant and popular form of finance that provided economic benefits,” the tribunal said.
Specifically, in its determination, the tribunal said: “Compliance with the responsible lending provisions of the NCCP (National Consumer Credit Protection) Act would require BNPL providers to adapt or create new systems for processing loan applications.
“The application and approval process would be more complex and would require customers to provide more personal data. This could significantly alter the features of BNPL finance that consumers find attractive, particularly the less onerous and intrusive information requirements.”
It continued: “Some consumers, who would benefit from acquiring NET products, may not qualify for finance under the responsible lending requirements but would not fall into financial hardship as a result of using BNPL finance, particularly as the NET products should generate future energy cost savings.
“If BNPL providers were required to comply with the responsible lending requirements, those consumers would either fall out of the NET market(s) (which would constitute a dead weight loss and public detriment) or would be forced to access BNPL finance from merchants who were not signatories to the code (losing the consumer protection benefits of the code).”
According to Plenti, while the NETCC allows the provision of BNPL finance, it “stipulates minimum standards, including in relation to the transparency of fees and charges and minimum levels of protection offered to consumers”.
Speaking to Mortgage Business about the tribunal’s determination, a Plenti spokesperson said the final NETCC decision provided clarity for the sector by allowing BNPL finance, subject to certain standards.
“As a regulated lender, Plenti is required to adhere to responsible lending and other guidelines stipulated under the NCCP for its interest-bearing products,” the spokesperson said.
“Plenti intends to introduce some of the regulated product standards to its BNPL offering, in terms of both its credit assessments, which will always include a credit bureau search, and the transparency it offers its customers.”
Commenting on the launch of the product and its expansion into BNPL finance, Plenti CEO Daniel Foggo said: “The performance of the pilot has far exceeded our expectations and gives us confidence in future demand from our total network of referral partners.
“By offering a simple zero interest payment plan, differentiated by customer-focused technology and term flexibility, we believe we can help more households enjoy the benefits of affordable renewable energy while helping Australia achieve its emissions reduction goals.”
Plenti has delivered finance to over 17,000 households since the launch of its renewable energy loans in 2017, it said.