UK Finance response to HM Treasury's Buy Now Pay Later consultation

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. The main piece of legislation in this area 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 Woolard Review recently recommended that the CCA should be reformed.

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 below. 

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