CANBERRA, AAP – The deputy chair of Australia’s corporate watchdog believes the “buy now, pay later” system benefits most consumers, but for one in five it is a very expensive form of credit.

However, Karen Chester, the deputy chair of the Australian Securities and Investment Commission, has no intention of destroying what has become a good growth industry.

New so-called Design and Distribution Obligations allow the regulator to pinpoint where any problems are in an entity and just deal with any harm that may be occurring.

Ms Chester described DDO as a “firm pre-emptive nudge”.

In the case of “buy now, pay later” firms, her concern is late payment fees.

“That area of revenue is high amongst a couple of the entities and it is a larger percentage of their revenue than it is for some,” Ms Chester told the Australian Financial Review Business Summit on Wednesday.

“DDO allows us to let the ‘buy now, pay later’ guys get their business models right, to get their target market determinations right, and then we don’t need to do anything.”

The regulator was under a cloud last year after its outgoing chairman, James Shipton, was investigated over his expenses.

While Mr Shipton was subsequently cleared of any misconduct, he still decided to resign.

Ms Chester, who confirmed she is vying for the top position, said calls for an overhaul of ASIC have been conflated.

She said the regulator had been reviewed five times in the last seven years – the latest being the Hayne royal commission into the financial system – but not one of them recommended an overhaul of its structures.