Customers utilizing purchase now pay later (BNPL) companies will profit from key safety measures already in place for different sorts of lending beneath new proposals from the UK monetary regulator.
The proposals from the Monetary Conduct Authority (FCA) embody requiring BNPL suppliers to carry out affordability checks earlier than granting loans and to supply assist to customers going through monetary difficulties.
These measures would additionally enable BNPL debtors to complain to the Monetary Ombudsman Service if one thing goes incorrect.
Any proposals for the sector from the FCA would come into impact when BNPL formally enters the remit of the regulator subsequent yr.
“Now we have lengthy referred to as for BNPL merchandise to be introduced into our remit, so individuals can profit from BNPL whereas being protected,” stated Sarah Pritchard, deputy chief govt on the FCA.
“Our regulation will assist customers navigate their monetary lives, with checks on whether or not they can afford to repay, assist when issues go incorrect and entry to the proper data to make knowledgeable selections.
“We’re primarily counting on present necessities, together with the Shopper Obligation, slightly than proposing to make a number of new guidelines, supporting progress and permitting corporations to innovate.”
In line with analysis from the FCA, a fifth of UK adults, round 11 million individuals, have used BNPL no less than as soon as within the 12 months previous Might 2024, up from 17% in 2022.
A spokesperson for Clearpay, a part of Block and one of many largest suppliers of BNPL companies within the UK, advised UKTN: “Clearpay has at all times referred to as for fit-for-purpose regulation that ensures shopper safety, supplies much-needed innovation in shopper credit score and helps the UK’s thriving fintech sector.
“In the present day’s announcement will assist foster belief amongst customers. It should additionally create a extra sustainable basis for the way forward for BNPL because it continues to develop as an on a regular basis fee choice for customers.”
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