(Reuters) -Australian fintech company Humm Group said on Friday its unit got an interim stop order from the country’s corporate regulator restricting it from issuing buy-now-pay-later products to new customers, sending the company’s shares down nearly 13%.
The interim stop order relates to Australian Securities and Investments Commission’s (ASIC) concerns regarding the target market determination for the company’s buy-now-pay-later products, Humm said in a statement.
“ASIC can confirm Humm is complying with the interim stop order and actively engaging with us to address all of the concerns raised,” a spokesperson for the regulator said.
Humm added it can continue to service existing customers to whom the product has already been provided.
Humm’s update comes just days after Australia said it would regulate buy-now-pay-later services as a consumer credit product under new laws, forcing BNPL providers to carry out background checks before lending.
The move would put companies like Humm, Afterpay – owned by Jack Dorsey’s Block Inc, and Zip Co under ASIC’s watch.
Humm is Australia’s third-largest BNPL provider with about 14% market share, according to IBIS World.
“Hummgroup is seeking to work closely with ASIC to urgently address the concerns raised in relation to the humm BNPL target market determination,” the company said.
Shares of the company fell as much as 12.9% to A$0.370, their lowest level since March 24, 2020.
ASX-listed shares of Afterpay-owner Block Inc dropped as much as 4.8%, posting their biggest single-day drop since May 8. Splitit Ltd tumbled as much as 8.3%, while Zip Co slipped 0.9%.
(Reporting by Riya Sharma and Himanshi Akhand in Bengaluru; Additional reporting by Harish Sridharan; Editing by Devika Syamnath and Shailesh Kuber)