The UK Government Is Introducing New BNPL Rules

The UK government is finally ready to roll out the new rules for the Buy Now, Pay Later (BNPL) sector, which has been waiting to be regulated for years.

The government said the new rules will clamp down on the ‘Wild West’ that the sector has turned into. The rules will introduce several changes that will give BNPL shoppers stronger rights and clearer information.

Meanwhile, the rules will reform the Consumer Credit Act — a 50-year-old document that needs drastic changes to better reflect modern borrowing trends. 

Thanks to the changes, BNPL is expected to be more in line with other credit products, but that also means that it will have similar requirements. Things like upfront checks to make sure people can repay their loans will be necessary, while access to refunds will become faster and fairer. Users will also be able to file a complaint with the Financial Ombudsman, should an issue occur. 

Now, the outdated and overly confusing rules will be removed under the FCA’s oversight, while the new laws will be put into place. 

Why now?

The change came after the FCA’s report revealed that one in ten BNPL users could not pay essential bills. Meanwhile, over a million Brits have used the BNPL sector in the past three years.

The legislation regulating BNPL will be laid in Parliament today, May 19. Commenting on the matter, Citizen Advice’s director of policy and consumer champion, Tom MacInnes, stated that people have been exposed to unaffordable debt from BNPP for too long.

“For some, this has had dire consequences. Many people struggle to repay credit they can’t afford, fall behind on essential bills, and often need emergency support, like food bank vouchers.”

He highlighted that this is by no means the end of the road. Instead, now is the time for the FCA to act swiftly and set out the strong consumer safeguards which are so urgently required.