The government has published its response to its consultation on the regulation of buy now pay later (BNPL) and short-term interest-free-credit (STIFC) products. The response follows a consultation from late 2021 and the outcome of the Woolard Review, which focussed on the potential detriment suffered by consumers using BNPL and STIFC products.
What is in scope?
The government looking to bring BNPL and STIFC products within the scope of financial services regulation by targeting the current legislative exemption that applies to both BNPL and STIFC products.
Certain types of agreement are to remain out of scope of future regulation, such as invoicing and arrangements between employers and employees.
Our note sets out the components of the government’s proposals for bringing BNPL and STIFC into the regulatory sphere, and the timetable for change.
This explains the proposed balance between applying current (prescriptive) consumer credit content regulation, alongside where it is proposed to tailor requirements for the different characteristics of these products, from marketing, to lending decisions, contracting, and handling arrears and default. It also summarises proposals for implementing some changes through regulation and others through FCA handbook.