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Buy Now, Pay Later Firm Gets Slapped with Sanction from ASIC

The Australian Securities and Investments Commission (ASIC) has imposed a stop order on Humm Group, a popular buy now, pay later service provider, preventing them from taking on new customers.

The sanction was issued due to ASIC's concerns about a document detailing the company's targeted market.

Issuers of consumer products are required by ASIC to explain the conditions and limitations of their products and to specify the target market, including how the products will be monitored and reviewed, as well as assessing whether or not the products are in line with customers' actual needs and financial circumstances.

Complying with Stop Order

Humm Group acknowledged the sanction, stating that it is closely working with ASIC to address the concerns. They are committed to complying with the requirements of the interim stop order, restricting them from providing the buy now, pay later service to new customers.

The company clarified that they will continue to serve their existing customers currently on the buy now, pay later scheme, which is the core of their business model. Humm Group operates several affiliated businesses, including Flexirent, and their branded buy now, pay later product.

Internal Struggles and Resignations

The Humm Group's leadership team underwent internal conflicts, particularly following the thwarting of plans to sell consumer finance assets worth $335 million to Australian finance lender Latitude last year. The plan entailed $35 million, plus 150 million shares from Latitude, which did not push through due to the founder's objection.

An uncertain environment ensued, resulting in the resignation of the company's chair, Christine Christian, earlier this year. Furthermore, the chief executive officer, Rebecca James, who joined the board in July last year, has announced that she will exit the business effective June 1. She will remain in her position until May 31, offering a one-month transition period to support incoming CEO, Stuart Grimshaw.

Performance and Stock Movement

As of Humm's last trade, their shares were valued at 42 cents, a 48% drop from their year-ago high of 81 cents.

Published:Saturday, 27th May 2023
Source: Paige Estritori

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