The UK plans to have lenders working on the “buy now, pay later” (BNPL) model carry out checks on customers’ ability to pay, obtain approval from the Financial Conduct Authority (FCA) and ensure that the advertisements for their offers are fair and clear, the government said on Monday.
BNPL companies, which are unregulated, typically offer interest-free short-term loans to pay off the price of products in installments and, according to the government, have rapidly increased in popularity.
The British government said it would publish a consultation on legislation for the sector by the end of this year and then regulate the text with specific rules by mid-2023.
Martin Lewis, founder of consumer campaign group MoneySavingExpert.com, said progress towards ensuring proper verification has been “painfully slow”.
“Buy now, pay later is often insidiously marketed as a simple payment option… It’s not. It’s a debt,” Lewis said.
The FCA in February told operators BNPL Clearpay, Klarna, Laybuy and Openpay to amend their contracts after identifying potential harm to customers. The body had to use UK consumer rights law.
BNPL companies charge online retailers a fee for each transaction.
Laybuy co-founder Gary Rohloff said the company has always favored proportionate rules that reflect the sport’s low risk and support the government’s approach.
Britain said last week it would update its decades-old consumer credit law to simplify rules and cut costs, with a public consultation due later in the year.
Source: CNN Brasil
