- The UK government is proposing new protections for Buy Now, Pay Later (BNPL) users, which will fall under the Financial Conduct Authority (FCA) regulatory supervision.
- Proposed amendments include:
- Assessment of repayment ability: BNPL providers will be required to evaluate shoppers’ ability to repay loans before approval.
- Improved information disclosure: Providers must offer “clear, simple, and accessible information” about loan agreements, with adaptations to the Consumer Credit Act to suit online usage.
- Current disclosure rules from the 1974 Consumer Credit Act will be modified to allow the FCA to present information in a more suitable format for digital transactions.
- If issues arise during the lending process, shoppers will gain stronger rights to dispute transactions and request refunds from lenders, with complaints managed by the Financial Ombudsman Service.
- A consultation on the proposed amendments has been initiated, set to close on 29 November. The legislation is expected to go to parliament in early 2025, with implementation planned for 2026.
- The government aims to enhance regulatory oversight of the BNPL sector, following earlier consultations that began in October 2021 and led to draft legislation in February 2023.
- Tulip Siddiq, Economic Secretary to the Treasury, stated the approach aims to provide consumer protections akin to other credit forms while allowing the BNPL sector to innovate and expand.
- The FCA supports the initiative, focusing on maintaining benefits for consumers while ensuring appropriate protections are in place.
