Advertising feature from Tudor Lodge Consultants

UK government outlines plans for regulation of buy now pay later industry

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The buy now pay later industry has exploded in recent years, with the industry now worth $100 billion (circa £70 billion).

Also known as BNPL, it is used by shoppers to delay payments on any kind of product from champagne to clothes and kitchens, and the option to pay nothing today and repay over 12 months in instalments or one lump sum, either interest-free or a little interest on top.

While the Financial Conduct Authority requires anyone offering consumer credit to be authorised, this is not currently the case with BNPL. The industry remains unregulated if customers make no more than 12 payments within 12 months or less and many other businesses are able to use this exemption including invoice financing, season tickets and white goods.

But given the size of the industry and its huge presence online, the FCA has been putting measures in place to introduce regulation to BNPL. In particular, the regulator wants to raise awareness about the offers that are being promoted to customers, the role or absence of credit checks, the costs involved and understanding of the product by consumers.

A consultation to regulate the industry was announced by the HM Treasury on 21 October 2021 and responses to be provided by the government by 6 January 2022. We hear from experts in the consumer finance space to get their thoughts on introducing regulation to BNPL.

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Daniel Tannenbaum

Is regulation for buy now pay later a good thing?

David Green, head of brand at Fund Ourselves said: ‘Introducing regulation would be welcomed. A lot of online purchases through different websites are sometimes so quick that the majority of customers do not fully understand how buy now pay later works and the potential implications of non-payment.

‘Buy now pay later has a lot of advantages for the website selling the product, the third-party processor and of course, the customer.

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