We welcome the government’s plans to regulate buy now pay later (BNPL) products. Given the evidence of consumer harm in the BNPL market, we support the government’s prioritisation of this issue, and look forward to regulation being delivered as quickly as possible. 

By bringing BNPL into the FCA’s remit, improving standards around consumer understanding, requiring affordability assessments, and allowing redress through the FOS, these proposals will provide significant benefits to consumers. We believe the government’s approach is broadly proportionate, and in general strikes a good balance between protecting consumers and maintaining access.

We remain concerned that limiting the scope of the legislation to third-party lenders could allow large merchants to bring BNPL ‘in house’, in order to get the benefits of the unregulated model. We would like government to consider how it would respond quickly to any developments like this in the market.

We agree that information requirements in the Consumer Credit Act (CCA) are not appropriate to BNPL products, and would be better based in FCA rules. However, as set out in the FCA’s Review of Retained Provisions of the CCA, there are key areas where CCA unenforceability sanctions would provide an important consumer protection, in combination with updated and proportionate information requirements.