In this episode, we dive into the UK Government’s official response to its consultation on Buy-Now, Pay-Later (BNPL) regulation—marking a pivotal shift in how short-term interest-free credit is governed.
🎯 What’s Changing?
The Treasury’s 2025 consultation confirms that BNPL agreements offered by third-party lenders will come under formal regulation. In contrast, merchant-provided BNPL will stay exempt for now under Article 60F(2) of the RAO, though this may change if consumer harm escalates.
🔍 Key Takeaways:
Third-party BNPL to be regulated: These providers must now seek FCA authorisation and comply with tailored rules being developed.
Merchant-provided BNPL still unregulated: Despite concerns over a two-tier market, the government sees limited current harm here but will monitor it closely.
Consumer Credit Act exemptions: Traditional CCA disclosure obligations will not apply. Instead, the FCA will design a more effective rules-based disclosure regime.
Section 75 protections apply: Consumers will benefit from robust purchase protection, even under BNPL arrangements.
Affordability checks and consumer duty: FCA’s principles-based oversight and rules on arrears and forbearance will cover BNPL agreements, supported by access to FOS and Breathing Space.
Financial promotions tighten: Merchants must have their BNPL promotions approved by authorised firms; TPR (Temporary Permissions Regime) firms can approve their own.
Time orders and debtor protections retained: Safeguards like court time orders and requirements after a debtor’s death remain in place.
📋 Implementation Timeline
The Statutory Instrument (SI) will be laid before Parliament in 2025. The FCA will consult and finalise rules within 12 months. The new BNPL regime is expected to be live by mid-2026.
🏢 For Firms: Be Ready
From affordability assessments to compliant disclosure and governance, the transition to regulation demands preparation. Compliance Consultant offers FCA authorisation support, training, audits, and a 25% discount until September 2025 for BNPL firms.
🛡️ Let’s ensure your firm is ready for the regulatory frontier.
📞 Book a Discovery Call now: https://bit.ly/CCDiscovr
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