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Budgeting services are frustrated at the Government's u-turn on plans which would require Buy Now Pay Later providers to do affordability checks before giving out loans.
Officials had proposed requiring the checks on anyone borrowing more than $600, to make sure it wouldn't send them into a debt spiral.
It prompted pushback from the Buy Now Pay Later industry, who argued they already protect consumers by freezing accounts when a payment is missed.
Commerce and Consumer Affairs Minister Duncan Webb has now concluded the checks would be "too onerous" given the providers only offer short-term, low-value loans.
But David Verry, a financial mentor with North Harbour Budgeting Services and a former banker, claims the Government is "going soft on consumer protection".
