Written by Elizabeth Piper and Hugh Jones
LONDON (Reuters) – The United Kingdom plans to have lenders work on a buy now, pay later (BNPL) model to conduct checks on customers’ ability to pay, get approval from the Financial Conduct Authority (FCA) and ensure their offers are fair, the government said on Monday. and clear.
BNPL companies, which are unregulated, offer short-term interest-free loans to pay product prices in installments, and, according to the government, their popularity has rapidly increased.
The British government has said it will publish an advisory on legislation for the sector by the end of this year, then regulate the text with specific rules by mid-2023.
Martin Lewis, founder of consumer campaign group MoneySavingExpert.com, said progress to ensure proper verification has been “painfully slow”.
Lewis said, “Buy now, pay later is often misleadingly marketed as a simple payment option… It’s not. It’s debt.”
The FCA notified operators BNPL Clearpay, Klarna, Laybuy and Openpay in February to amend their contracts after identifying potential harm to customers. The agency had to use UK consumer rights law.
BNPL companies charge online retailers a fee for each transaction.
Laybuy co-founder Gary Rohloff said the company always favors proportional rules that reflect the sport’s low stakes and support the government’s approach.
Britain said last week it would update its decades-old consumer credit law to simplify rules and cut costs, with a public consultation due later in the year.
(by Elizabeth Piper and Hugh Jones)
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