Context
Alison Walters, Director of Consumer Finance at the FCA, has commented on the start of Buy Now Pay Later (BNPL) regulation, which commences from 15 July. It is the first time a product used by millions of people in the UK has been subject to regulation.
Key points to note and next actions
- BNPL provides an important role by helping people manage their cash flow but can also attract risk if customers are unable to manage their finances properly.
- The FCA is therefore taking a deliberate and proportionate approach to regulating BNPL by building on its existing consumer credit rules. An affordability check is being introduced and firms will be able to tailor their approach to assessments depending on the product and the customer’s circumstances.
- The FCA wants to ensure that those using BNPL have a clear view of what they owe, to avoid situations which may lead to missed payments, late fees or worsening the customer’s financial position.
- Support for those who need it will become available, with firms being required to provide assistance that is appropriate to the customer’s circumstances. For example, allowing for lower repayments or giving more time to repay.
The FCA will be monitoring how the market evolves once BNPL regulation starts, noting that regulating the sector should support innovation and access to credit whilst ensuring that consumers are treated fairly and are given the right protections.