BNPL regulation by UK gov set to “protect millions”

The UK government has announced plans to strengthen regulation around interest-free buy now, pay later (BNPL) credit agreements to protect “millions of people”.

UK gov to strengthen BNPL rules

Under the plans, lenders will be required to carry out affordability checks to ensure loans are affordable to customers and rules will be amended to make sure advertisements are “fair, clear and not misleading”.

Lenders offering BNPL services will need to be approved by the Financial Conduct Authority (FCA) and borrowers will be able to lodge complaints with the Financial Ombudsman Service (FOS).

“BNPL credit agreements can be a helpful way to manage your finances, allowing people to spread the full cost of a purchase over time,” the government says.

“However, people do not currently have the usual full range of borrower protections when taking out this type of loan and they are rapidly increasing in popularity, resulting in a potential risk of harm to consumers.”

The government plans on publishing a consultation on draft legislation by the end of this year. Following this, it aims to lay secondary legislation by mid-2023, after which the FCA will consult on its rules for the sector.

“By holding BNPL to the high standards we expect of other loans and forms of credit, we are protecting consumers and fostering the safe growth of this innovative market in the UK,” says John Glen, economic secretary to the Treasury.

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• Source: https://www.fintechfutures.com/2022/06/bnpl-regulation-by-uk-gov-set-to-protect-millions/