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FCA welcomes HM Treasury ‘Buy Now Pay Later’ regulation consultation

Oct 18, 2024 | FCA

Link(s):FCA welcomes buy now pay later consultation | FCA
Regulation of Buy-Now, Pay-Later: consultation on draft legislation (October 2024) – GOV.UK (www.gov.uk) Regulation_of_BNPL_consultation_2024_-_final_17.10.pdf (publishing.service.gov.uk)
BNPL_SI_draft.pdf (publishing.service.gov.uk)

Context

The FCA has announced that it welcomes HM Treasury’s Consultation about the proposed regulation of the ‘buy now pay later’ credit sector.  The Consultation responds to the 2021 Woolard Review which recommended that BNPL be brought into regulation (which the FCA supported), and also responds to feedback HM Treasury received to its previous consultation that ran between February and April 2023.

Key points to note and next actions

  • The FCA will consult on proposed Rules and an approach to authorising BNPL firms shortly after the legislation is finalised.
  • The FCA intends to put in place a temporary permissions regime (similar to how the introduction of Consumer Credit regulation was handled)
  • The legislation will likely involve Consumer Credit Act reform, and an amendment to the use of the ‘number of repayments’ exempt agreements exemption.
  • The proposals will impact third-party finance arrangements (so not arrangements where the seller of the goods and services is also the lender), but will specifically exclude agreements financing contracts of insurance, registered social landlords, and employer/employee lending.