New BNPL regulation in the UK to protect million

The Government of the United Kingdom has announced in June 2022 a new plan to grow the country’s economy to tackle the cost of living, including new regulation to protect millions from the potentially negative aspects of local BNPL service providers.

The Chancellor provided GBP 37 billion of support for help, including providing 8 million British families with over GBP 1,200 in direct payments in 2022, and giving every household across the country GBP 400 to help with energy bills.

As the global economic crises continues to deepen and Europe is more affected by the downsides of the war, gas and electricity prices have more than tripled in less than a year, affecting most of Europe’s population and putting millions under the poverty line. The UK government is looking to protect its people by strengthening the interest-free Buy Now, Pay Later (BNPL) credit agreements, through new regulation. 

As per the new legislation proposals, lenders will be required to ensure loans are affordable and rules will be amended so that all advertisements are fair, clear, and transparent. 

The country’s government is also looking to expand rules to cover other forms of unsecured short-term credit that pose similar risks to consumers, including those used for dentistry work. UK lenders offering similar credit products will now need to be previously approved by the FCA, while borrowers will be allowed to take a complaint to the Financial Ombudsman Service (FOS).