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News

Britain to soon lay out new plans to regulate BNPL firms

Tuesday 30 July 2024 09:57 CET | News

The new Labour government in Britian has announced that it will soon set updated plans to regulate the BNPL industry.

 

A representative from the Treasury department confirmed that the government would release these plans shortly. The Treasury spokesperson stated that regulating Buy Now Pay Later products is crucial to protect people and deliver certainty for the sector. 


The announcement follows several delays in the roadmap for BNPL legislation in the UK. The government initially proposed regulation for the sector in 2021 after a review by former Financial Conduct Authority chief Christopher Woolard revealed that over 10% of BNPL customers were in arrears.   

The new Labour government in Britian has announced that it will soon set updated plans to regulate the BNPL industry.

 

Most BNPL companies generate revenue by charging fees per transaction to their merchant partners rather than charging interest or late payment fees. However, some firms do impose fees for missed payments, leading to a lack of standardisation across the industry. 

As per the announcement, the inconsistency in services among BNPL providers is one reason campaigners have called for regulation. Another significant concern is the growing debt among consumers, particularly younger individuals, who often accumulate debt from multiple BNPL providers beyond their means to repay. 

Delays to BNPL regulation 

Efforts to regulate the BNPL sector were repeatedly delayed under the previous Conservative government. This was largely due to the politics in the UK, which saw three different prime ministers in 2022, and lobbying from major industry players.  

In a policy paper released in 2023, the UK government proposed applying elements of existing regulations for mainstream lenders and credit card companies to BNPL plans. These proposed regulations include increased information disclosure, certain exemptions for lenders, and oversight by the Financial Conduct Authority. 

BNPL firms, Klarna and Block, pushed back on those proposed measures, saying they threatened to drive people toward more expensive credit options like credit cards and car financing plans. 

Source: Link


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Keywords: BNPL, regulation, compliance, instalment payments
Categories: Payments & Commerce
Companies:
Countries: United Kingdom
This article is part of category

Payments & Commerce

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