The banks representative is lobbying the federal government to bring rapidly expanding short-term lenders under the umbrella of the broader financial services sector, warning consumers risked getting into financial difficulty.

Afterpay and Zip Pay, two of the layby industry’s largest players, are available at many retailers with shopfronts at Dubbo.

During a visit to the city on Friday, Ms Bligh reiterated her concerns about “the buy now, pay later schemes that are emerging very quickly”.

“They’ve started very quickly online, which affects people in all parts of Australia,” she said.

“But I’ve walked the main street of Dubbo this morning and most of these companies are advertising on retail windows up and down the street, so obviously people in the region are using this form of funding.

“Obviously consumers should have choice for how they pay for their purchases, but I think no matter what door a consumer walks into, they should be entitled to the same consumer protections and these kinds of companies are not subject to any of the regulations that banks or other financial services providers are.”

Bank leaders had to front the Hayne royal commission in 2018 to give evidence in response to the powerful inquiry’s interim report, which labelled the industry as being driven by greed.

The final report is yet to be handed down, but Ms Bligh says banks are committed to change, and have started doing so.

A coalition of consumer groups has echoed the banks’ concerns about ‘buy now, pay later’ providers.

They urged policymakers to bring the short-term lenders under the National Credit Protection Act.

Afterpay economic adviser Craig Emerson said the banks were running a scare campaign while watching their credit card use fall.

In the lead-up to this month's Senate inquiry, the sector’s biggest players are preparing for change.

Afterpay has backed a call to give the Australian Securities and Investment Commission greater powers to intervene in the sector.

Rival Zip Pay endorsed a push for greater regulation, arguing specialists should be compelled to verify customers identities, income and credit history.