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Treasury launches BNPL consultation
The treasury has launched a consultation on possible Buy Now, Pay Later (BNPL) regulation.
Senior Journalist covering the Credit Strategy, TRI News and Reward Strategy brands.
Senior Journalist covering the Credit Strategy, TRI News and Reward Strategy brands.
The consultation is seeking views to inform the scope and nature of the regulation, but the document suggests that some existing regulation can be applied to BNPL.
The consultation explained that the government’s view is that the full extent of the Consumer Credit Act mandated pre-contractual information, when coupled with the requirements in Financial Conduct Authority’s (FCA) regulation, may not be appropriate for BNPL.
This is because the risks of the product are lower given that it is interest free, and mandated information about the cost of the credit is not well suited to BNPL products.
The consultation highlighted the rapid expansion of the BNPL model in recent years and said there is reason to believe that this growth will continue.
The value of transactions using BNPL from main providers more than tripled in 2020. Some 11% of consumers (around five million individuals) said they had used a BNPL product since the start of the pandemic.
The concerns about whether BNPL is giving rise to consumer detriment was investigated in more detail in February’s Woolard Review.
The consultation will be open for 12 weeks and will close at 11.59pm on 6 January 2022.
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