All companies must comply with consumer protection legislation, which the FCA has powers to enforce. This includes the Consumer Rights Act 2015 (CRA) for contracts entered into from 1 October 2015 and the Unfair Terms in Consumer Contracts Regulations 1999 for contracts entered into between 1 July 1995 and 30 September 2015.
The FCA has identified potential harm to consumers and contacted four firms with its concerns. This is in line with their strategy to act as an assertive regulator, by being proactive at the boundaries of the FCA perimeter where appropriate, and has resulted in favourable outcomes for consumers in this sector.
The four BNPL providersfirms involved, Clearpay, Klarna, Laybuy and Openpay, have fully cooperated with with the FCA’s work. As a result, the companies have agreed to change terms in their consumer contracts to make them fairer, easier for consumers to understand, and to better reflect how they use them in practice.
In this regard, the changes pointed out by the FCA were terms setting out what happens if a consumer cancels the contract for purchases funded by a BNPL loan, terms enabling the firms to terminate and/or suspend a consumer’s account or access to services, the right of set-off terms, and continuous payment authority terms.
As well as changing their terms, some of the companies have offered to voluntarily refund consumers who have in the past been inappropriately charged fixed late payment fees for instalments that were stated to be due after they cancelled their entire online sales purchase with the retailer. This applies to Clearpay, Laybuy and Openpay.
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