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Fashion Network
19-05-2025
- Business
- Fashion Network
UK announces new rules for BNPL, two providers support changes
Stricter rules have been announced to protect shoppers using buy-now-pay-later (BNPL) credit services, with the UK government saying it wants to end the 'wild west' of unregulated borrowing. Under the legislation, lenders will have to carry out 'affordability checks' to stop people taking on too much debt and shoppers will also have faster access to refunds. Two major suppliers, Klarna and Clearpay, said they support the changes. Some 11 million people in the UK are estimated to have used BNPL in the last year. But campaigners say the system encourages shoppers to spend more than they can afford. Consumer groups welcomed the move claiming many users didn't realise they were taking on debt they might struggle to repay. Organisation Citizens Advice noted that BNPL products are currently unregulated and the new measures were a 'crucial step' towards better protection for shoppers, the report said. Its director of policy, Tom MacInnes, told the BBC: 'For too long, people have been exposed to unaffordable debt from a BNPL sector that has operated in a regulatory grey area," said T at Citizens Advice. '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." Emma Reynolds, economic secretary to the Treasury, also said BNPL had 'transformed shopping for millions', but had left consumers exposed and operated as a 'wild west'. 'These new rules will protect shoppers from debt traps and give the sector the certainty it needs to invest, grow, and create jobs.' Under BNPL, rather than paying the full amount of a purchase in one go, shoppers can spread payments into smaller amounts over a period of time, with payment in three or four monthly chunks being widely used by BNPL providers.
Fashion Network
19-05-2025
- Business
- Fashion Network
UK announces new rules for BNPL, two providers support changes
Organisation Citizens Advice noted that BNPL products are currently unregulated and the new measures were a 'crucial step' towards better protection for shoppers, the report said. Its director of policy, Tom MacInnes, told the BBC: 'For too long, people have been exposed to unaffordable debt from a BNPL sector that has operated in a regulatory grey area," said T at Citizens Advice. '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." Emma Reynolds, economic secretary to the Treasury, also said BNPL had 'transformed shopping for millions', but had left consumers exposed and operated as a 'wild west'. 'These new rules will protect shoppers from debt traps and give the sector the certainty it needs to invest, grow, and create jobs.' Under BNPL, rather than paying the full amount of a purchase in one go, shoppers can spread payments into smaller amounts over a period of time, with payment in three or four monthly chunks being widely used by BNPL providers.
Fashion Network
19-05-2025
- Business
- Fashion Network
UK announces new rules for BNPL, two providers support changes
Stricter rules have been announced to protect shoppers using buy-now-pay-later (BNPL) credit services, with the UK government saying it wants to end the 'wild west' of unregulated borrowing. Under the legislation, lenders will have to carry out 'affordability checks' to stop people taking on too much debt and shoppers will also have faster access to refunds. Two major suppliers, Klarna and Clearpay, said they support the changes. Some 11 million people in the UK are estimated to have used BNPL in the last year. But campaigners say the system encourages shoppers to spend more than they can afford. Consumer groups welcomed the move claiming many users didn't realise they were taking on debt they might struggle to repay. Organisation Citizens Advice noted that BNPL products are currently unregulated and the new measures were a 'crucial step' towards better protection for shoppers, the report said. Its director of policy, Tom MacInnes, told the BBC: 'For too long, people have been exposed to unaffordable debt from a BNPL sector that has operated in a regulatory grey area," said T at Citizens Advice. '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." Emma Reynolds, economic secretary to the Treasury, also said BNPL had 'transformed shopping for millions', but had left consumers exposed and operated as a 'wild west'. 'These new rules will protect shoppers from debt traps and give the sector the certainty it needs to invest, grow, and create jobs.' Under BNPL, rather than paying the full amount of a purchase in one go, shoppers can spread payments into smaller amounts over a period of time, with payment in three or four monthly chunks being widely used by BNPL providers.
Metro
19-05-2025
- Business
- Metro
Shoppers using Klarna could now face stricter credit checks
The government has announced plans to regulate the 'Wild West' of payment plans offered by firms like Klarna and Clearpay. Such 'Buy-Now Pay-Later' (BNPL) firms only became available in the last 10 years, and it has taken until now for the laws around them to catch up. Although they are a form of lending, like the use of credit cards, there are far fewer rules about their use. This is set to change from next year, as part of reforms which will also give shoppers more rights. Typically used for smaller transactions, such as clothes bought online, BNPL buys can nevertheless add up to significant amounts if used for many things. Those who take on too and can't pay risk getting a black mark on their credit file, as well as racking up unaffordable debt. Over 11 million people in the UK use Klarna alone, which is available as a payment option with 60,000 sellers including John Lewis, Argos, eBay and Eurostar. If they want to continue, they will now have to accept mandatory checks to make sure they can repay what they borrow. Klarna already voluntarily uses soft credit checks, which do not leave a mark on the user's file if unsuccessful. Under the new rules, they may be required to take more into account, such as current outgoings as well as credit history. Klarna say that they help people avoid damaging debt, claiming to have 'helped shoppers avoid nearly half a billion pounds in interest by offering a simpler, fairer alternative to credit cards'. They said the average outstanding BNPL balance was £150 compared with £1,295 for credit cards. Another key BNPL operator, Clearpay, said they welcomed the changes and thought they could lead to more shoppers using them. A spokesperson for the company said legislation would 'create a more sustainable foundation for the future of BNPL as it continues to grow as an everyday payment option for consumers'. The government says customers will get fairer and faster access to refunds, as well as the right to complain to the Financial Ombudsman — bringing BNPL in line with other credit products. Clearer information must be provided when people agree to use these products. Emma Reynolds, economic Secretary to the Treasury, said: 'Buy-Now, Pay-Later has transformed shopping for millions, but for too long has operated as a wild west – leaving consumers exposed. 'These new rules will protect shoppers from debt traps and give the sector the certainty it needs to invest, grow, and create jobs through our Plan for Change. More Trending 'The announcement is backed by brand new reforms to the Consumer Credit Act — which will replace a 50-year-old regime with a modern, pro-growth framework that reflects how people borrow today.' Tom MacInnes, director of policy at Citizens Advice, said: 'For too long, people have been exposed to unaffordable debt from a BNPL sector that has operated in a regulatory area. 'For some time, 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.' He added that this was 'not the end of the road', and urged the FCA to 'act swiftly to set out the strong consumer safeguards that are so urgently required'. Get in touch with our news team by emailing us at webnews@ For more stories like this, check our news page. View More » MORE: Phone thieves stole £10,000 from my savings but the bank says it's my fault MORE: Can't get through to your bank? 4 ways to demand the service you deserve MORE: Major checkout shake-up could see key payment rule scrapped in all UK shops
Finextra
19-05-2025
- Business
- Finextra
UK Government to rush through new rules to tame BNPL 'wild west'
After years of wrangling, the UK Government is finally introducing new rules to clamp down on what it describes as the 'wild west' of buy now, pay later lending. 0 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.' The new rules have generally been welcomed by BNPL providers. A spokesperson for Clearpay says: 'Recent Clearpay research highlighted that nearly half of UK adults (48%) are more likely to use BNPL once regulation is passed, and with 71% believing that it is important for BNPL to be subject to UK financial legislation, today's announcement will help foster trust among consumers. It will also create a more sustainable foundation for the future of BNPL as it continues to grow as an everyday payment option for consumers.'
