Sky News has learned that the government is likely to drop plans to crack down on Britain’s fast-growing “buy now, pay later” (BNPL) business.
The report claims that in recent discussions with the business, Treasury officials were informed that if “heavy-handed” regulation is applied to them, some of the industry’s major players may leave the UK market.
In February, the UK Treasury finally started the long-awaited debate on how the FCA should regulate the growing “buy now, pay later” market. The regulator made suggestions like having credit agreements spell out the terms of deals when people take them out and having stores advertise the services to make sure people know the risks. The consultation also said that section 75 of the Consumer Credit Act should be used, which would make BNPL providers and retailers both responsible for the contract, just like credit card companies are.
The fintech industry group Innovate Finance criticized the plans, saying that they would be harder to follow than the rules for credit cards.
One source told Sky News that a final decision hadn’t been made yet, but that the Treasury was leaning toward putting the plans on hold because Whitehall was worried that it would make it harder to get low-interest goods.
Consumer groups that have been pushing for a crackdown on BNPL for a long time because they worry it is putting more debt on people who are already struggling financially are likely to get very angry if BNPL regulations are delayed. Which?, a consumer group, has called for stronger protections after study showed that shoppers see BNPL products more as ways to manage their money than as credit.
