Government announces new BNPL consultation

The legislation sets out to clamp down on the largely unregulated sector that quadrupled in size during the pandemic. 

Many consumers use BNPL products to spread out the cost of purchases such as clothes. The plans are often interest-free and set over a certain number of months. 

The government has been discussing regulation for the sector for some time now, mainly concerned with checks on affordability for customers.

The government is now consulting on the proposed draft legislation that will bring BNPL into Financial Conduct Authority regulation. The consultation asks for stakeholders’ views on whether the draft legislation effectively delivers the policy positions set out in the government’s consultation response.

The consultation will close on 11 April. 

Finance minister Andrew Griffith said in a tweet: “Buy-Now Pay-Later can be an easy and helpful way for people to manage their finances, allowing them to spread the cost of a purchase without paying any interest. We want to protect the minority who may end up borrowing more than they can affordably repay.”

Alex Marsh, Head of Klarna UK, said: "We’re not waiting for regulation! In the 2 years since the Woolard review we have continued to build the fairest and best value credit products in the UK, saving our 18m customers hundreds of millions of pounds in interest charges each year. With a cost of living crisis raging, BNPL and credit providers must follow our lead and make changes now to protect consumers.” 

To here more about BNPL and its future, as well as many other topics that affect the whole industry, be sure to book a ticket to 2023’s Credit Summit, taking place at the QEII Centre in London.