Credit regulation/legislation

Buy now pay later

Following HM Treasury’s original consultation in October 2021, to which we responded – see here – a further consultation was issued on the draft legislation in February 2023.  Our response to this can be seen here.

All of these members support bringing BNPL within the scope of regulation and collectively consider that the broad exclusion of merchant funded BNPL products has the potential for consumer detriment and ought to be reconsidered by HMT.  We note that the draft CCD recognises the potential for this harm to develop and is proactively seeking to address this, whilst balancing the concerns around the problems that drawing the regulatory perimeter too broadly, to include all deferred payments, would create.

All of our members are keen to see regulation of BNPL without further delay. However, members do not consider that the current requirements as set out in the CCA are generally fit for purpose, particularly regarding the pre contract information and agreement regulation requirements. There is a desire for timely reform of these provisions for all products and many of our members are calling for accelerated reform of discreet provisions of the CCA, as noted below, rather than exclusively in relation to BNPL

CCA reform

We welcome the proposed reform of the CCA, which we have long argued is in need of reform to support innovation and help firms better support customers.  In June 2022, the government committed to reform the CCA and we actively participated with HM Treasury at a series of roundtables on their key areas of focus (information requirements, consumer rights and protections, and sanctions) to help inform their subsequent consultation.

Our input into the consultation calls out areas which do not support customers and indeed have the potential to harm customers and where the requirements are archaic and, in some cases, where they are no longer required  We gathered the broad views of members, including options for the potential timing and phasing of reform that could be achieved through secondary legislation to support members’ Consumer Duty obligations and improve customer understanding of their credit agreements to deliver good outcomes, whilst retaining appropriate levels of consumer protections.

Following the submission of the consultation response in March 2023, we continue to work with our members and to seek to actively engage HM Treasury and the FCA to help progress reform, noting the complexity and inter-dependencies between different elements of The Act.

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, commencing at some point in 2023.  UK Finance and its members will engage with the FCA as this work moves forward.