Australia's powerful finance watchdog has blocked a popular buy now, pay later service from taking on new customers amid internal upheaval.
The Australian Securities and Investments Commission slapped the Humm Group with a stop order on Friday over concerns about a document explaining the lender’s target market.
In a statement, the ASX-listed lender said it was urgently working with ASIC to remove the order, which will stop it from taking on new customers for up to 21 days.
“Humm Group is complying with the requirements of the interim stop order which restricts the ability to provide the buy now, pay later (BNPL) product to new customers,” a spokesperson said.
“Humm Group is seeking to work closely with ASIC to urgently address the concerns raised in relation to the Humm BNPL target market determination.”
ASIC requires issuers of consumer products to specify the conditions and restrictions on its products and who is likely to acquire them.
Issuers are also required to detail how their products will be monitored and reviewed and determine if those products are consistent with their customers’ likely objectives, financial situation and needs.
Humm Group confirmed that it would continue to service existing customers who had already signed up to the buy now, pay later scheme.
The company operates several businesses, including its branded buy now, pay later product and Flexirent.
The Australian reported that the lender had been gripped by uncertainty following conflict among the company's leadership team after founder Andrew Abercrombie scuttled plans to sell consumer finance assets.
The deal would have facilitated the sale of assets worth $335mn to Australian finance lender Latitude, which would have also comprised of $35 million and 150 million Latitude company shares.
The national paper also reported that Humm chair Christine Christian quit the lender, while chief executive Rebecca James also announced she would exit the business effective June 1 after joining the board in July last year.
Ms James will remain in her role until May 31 before a one-month transition period to support incoming chief executive Stuart Grimshaw. Shares in Humm last traded at 42c, down 48 per cent from their peak of 81c on June 3 last year.