The UK Government has today launched a consultation on proposals to bring Buy-Now, Pay-Later companies under the supervision of the Financial Conduct Authority (FCA) and enforce the Consumer Credit Act, ensuring that users receive clear information, they avoid unaffordable borrowing and have strong rights when problems arise.
The new rules will allow the FCA to apply affordability rules – meaning Buy-Now, Pay-Later firms will have to check that buyers can afford the repayments before offering a loan, which it will help prevent the build-up of unmanageable debt.
Companies should also provide clear, simple and accessible information about loan agreements in advance so that buyers can make fully informed decisions and understand the risks associated with late repayments. The Consumer Credit Act’s information disclosure rules will not apply, so the FCA can consult bespoke rules that ensure that users are provided with this information in a manner tailored to the online setting in which Buy-Now, Pay products are generally used -Later.
Buy-Now, Pay-Later users will have stronger rights if problems arise with the products they buy, making compensation faster and easier. This includes the implementation of Section 75 of the Consumer Credit Act, which allows consumers to claim refunds from their lender and access to the Financial Ombudsman Service to make complaints.
The consultation will end on November 29.
The final legislation is expected to be tabled in Parliament in early 2025. Once the legislation is in place, the FCA will finalize the rules to come into force in 2026.