Labour to give BNPL consumers same protections as credit card users

Back in February 2021, the government promised it would bring forward new BNPL regulation designed to protect consumers – but most in the industry said they did not expect to see the rules change before the next election. 

Outlined in a letter from shadow city minister Tulip Siddiq to the economic secretary to the Treasury Andrew Griffith – and following calls for the government to “urgently” introduce legislation designed to regulate the market – Labour has said BNPL customers must have access to clear information about what they’re signing up to.  

It’s also calling for better consumer protection if something goes wrong – saying that they must have access to payment protections as they’d get with a credit card, and they must be able to take complaints to the Financial Ombudsman Service.

Additionally, the party has said vulnerable consumers who may be at risk of unaffordable debt must be protected – with these protections including affordability assessments and better information sharing across the market. 

In response to the news, a spokesperson for the UK’s biggest BNPL provide Klarna to The Times: “We have said for a long time that BNPL should be regulated so that consumers have clear information, are protected from bad actors and continue to have access to zero-cost credit.  

Meanwhile, a Treasury spokesperson told the outlet: “When used appropriately [BNPL] can be a useful, interest-free way for consumers to manage their finances.

“We must ensure that regulation of these products is proportionate to ensure borrowers are protected without unduly restricting access. We will publish a response to our consultation in due course.”