KEY POINTS -
- On the face of it buy-now, pay-later (BNPL), as an interest and charge free credit facility, appears low risk but couple its ready availability with the fact that it comes without any of the protections inherent in the regulated credit regime and the valid concerns that borrowers could sleepwalk into over-indebtedness become very real.
- The new regime seeks to target regulation in a proportionate way. Consumers need to have clear information and balanced protections but there is no wish to deter lenders from making interest free credit available, which could be the position if lenders were made subject to the full current regime for regulated credit.
- The proposed legislation is only half the story. Much is left to the Financial Conduct Authority (FCA) which is charged with putting in place the detailed rules to support the tailored regime.
- Legislation in the shape of the Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order (RAAO) is due to be placed before Parliament this year. “Regulation Day” is currently stated to be 12 months from the date the RAAO is passed. Between enactment and Regulation Day, the FCA will consult upon and finalise the new rules.
- Existing BNPL lenders will be able to continue lending as long as they apply for permission under a proposed Temporary Permission Regime.
Please see full publication below for more information.
