FCA Consults On Proposed Rules And Guidance For BNPL Sector

Last week we reported that the UK government had made legislation to bring deferred payment credit (DPC) or "buy now pay later" (BNPL) products into FCA regulation. These products are unregulated interest-free credit that finances the purchase of goods or services and that is repayable in 12 or fewer instalments within 12 months or less.

BNPL products are currently exempt from regulation. Lenders who only provide them do not currently need to be FCA authorised. There are concerns that this may result in borrowers not getting sufficient information about DPC agreements. There are also concerns DPC borrowers may not be able to afford it, particularly as they are more likely to be in financial difficulty compared to the general population.