Credit regulation/legislation

Buy now pay later

Following HM Treasury’s (HMT) 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 our unsecured consumer credit 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.

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 Consumer Credit Act 1974 (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 reform of the CCA, as noted below, rather than exclusively in relation to BNPL.

We now await further updates from HMT, following the change of government, and stand ready to reengage in work to move this matter forward.

CCA reform

We welcome the proposed reform of the CCA, which we have long argued is in need of such 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 HMT 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.

Following the submission of the consultation response in March 2023, we continue to work with our members and HMT and the Financial Conduct Authority (FCA) to help progress reform, noting the complexity and inter-dependencies between different elements of the Act. We note the new Government supports reform of the Act noting that in its current guise it is failing consumers and stifling innovation. The Govt. confirms it requires updating to provide an outcomes-based approach which is fit for the digital age and we look forward to the resumption of the round tables with HMT which were paused pending the election.

FCA Credit Card Market Study (CCMS)

A series of remedies were implemented from 2018 following the CCMS, including in relation to ‘persistent debt’.

The FCA is in the process of evaluating the effectiveness of these remedies, with outcomes expected to be published later in 2024.  We are working with members to understand the effectiveness of the remedies and will closely engage with the FCA as this work moves forward and consider its findings.