Credit regulation/legislation

Buy now pay later

• We await publication of the government’s response to the Buy-Now, Pay Later (BNPL) consultation following the submission of our response on behalf of our members.
• In October 2021 HM Treasury launched a consultation looking at the extent to which Buy Now Pay Later (BNPL) needs to be regulated and covered by the same legislation as other consumer credit products, such as credit cards. This is a fast-growing area within the financial services sector.
• The UK Finance response to HM Treasury’s consultation reflects the collective comments of a number of our members, including providers of regulated consumer credit products and providers of currently unregulated BNPL lending. 
• All of these members support bringing BNPL within the scope of regulation. 
• Some members believe that BNPL presents lower risks to customers than other consumer credit products and as such the application of certain provisions of the CCA should be modified. The majority of our members however believe the same regulations should apply to BNPL products to ensure customers receive the same level of protection and that regulations should be applied consistently across all forms of credit to promote competition. Our consultation response sets out these different perspectives. 
• There are a number of important aspects of the existing regulatory regime that our members collectively believe should be extended to cover BNPL including, assessing affordability, the application of consumer protections through section 75 of the CCA, the jurisdiction of the Financial Ombudsman Service and support that is required to be offered to customers who find themselves in financial difficulty.
• Our full consultation response is available to view here.

CCA reform

The main piece of legislation for consumer credit is the Consumer Credit Act (CCA), which we have long argued is in need of reform to support innovation and help firms better support customers. The Financial Conduct Authority’s recommendation, set out post the Woolard Review supported reform of the CCA and we are encouraged by what we understand to be HMT’s current appetite to progress this broader  reform. This will be a core component of our industry positioning around the contentr financial services bill 2022.

FCA Credit Card Market Study (CCMS)

A series of remedies were implemented from 2018 following the CCMS, including in relation to ‘persistent debt’, and it is anticipated that the FCA will undertake a review of the effectiveness of these in late 2022, or early 2023.  UK Finance and its members will engage with the FCA as this work moves forward.