UK Government to rush through new rules governing buy now, pay later products
After years of haggling, the UK Government is finally introducing new rules to clamp down on what it describes as the 'wild west' buy now, pay later sector.
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Under the changes, millions of BNPL shoppers will gain stronger rights and clearer information as the Government reforms the 50-year-old Consumer Credit Act to better reflect modern borowing trends.
That means upfront checks to make sure people can repay what they borrow, fairer and faster access to refunds, and the right to complain to the Financial Ombudsman — bringing BNPL in line with other credit products.
The Government says outdated and confusing rules will be removed, with oversight shifting to the FCA.
The legislative shift comes as a report by the FCA showed that one in ten people were unable to pay essential bills while millions more Brits were using buy now pay later products over the last three years.
The legislation bringing BNPL into regulation will be laid in Parliament on 19 May.
Tom MacInnes, director of policy at consumer champion Citizens Advice, says: 'For too long, people have been exposed to unaffordable debt from a BNPL sector that has operated in a regulatory grey area. For some, this has had dire consequences. Many people are struggling to repay credit they can't afford, falling behind on essential bills and often needing emergency support, like food bank vouchers.
'But this is by no means the end of the road. We now need to see the Financial Conduct Authority (FCA) act swiftly to set out the strong consumer safeguards that are so urgently required.'
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