The UK government has announced impending BNPL regulations.
- New legislation aims to introduce affordability checks and consumer safeguards.
- A consultation with firms and regulators is set to conclude by November 2024.
- Final rules will be presented to Parliament in early 2025, with implementation planned for 2026.
- Economic Secretary Tulip Siddiq leads the charge, criticising previous delays.
The United Kingdom government is preparing to implement new regulations around Buy Now, Pay Later (BNPL) services. These are aimed at introducing affordability checks and enhancing consumer protections to prevent customers at risk from accumulating excessive debt. Economic Secretary to the Treasury, Tulip Siddiq, has spearheaded this initiative.
A consultation has been announced to gather input from BNPL firms and regulatory bodies, ensuring that the new rules are effectively enacted. The consultation period closes on 29 November 2024, paving the way for final legislation to be introduced in Parliament in early 2025, with these rules expected to come into effect in 2026.
Siddiq has been vocal about her commitment to these new regulations, emphasising the need for protections for the millions using BNPL services. ‘Millions of people use buy now pay later to manage their finances, but the previous government’s ‘dither and delay’ left them unprotected,’ she stated, underscoring the urgency and necessity of implementing these measures.
The previous Conservative government had introduced draft legislation to regulate BNPL as a credit product; however, this was stalled due to concerns over the potential exit of BNPL providers—a worry dismissed by Financial Conduct Authority chief, Nikhil Rathi, as unfounded. In her prior role as shadow city minister, Siddiq criticised these delays, pointing to the risks faced by the British public amid the deepening cost-of-living crisis.
Advocates for the legislation, including Rocio Concha, director of policy and advocacy at Which?, have stressed the need for robust consumer protection similar to other credit products. They highlight that many users remain unaware of their indebtedness or the repercussions of missed payments, thus underscoring the importance of clear information about potential risks and the necessity for affordability checks.
The impending BNPL regulations promise a significant shift in consumer protection standards, set to fortify the financial landscape by early 2026.
