Buy now, pay later regulation could be shelved


government buy now pay later news

Treasury officials reportedly considering ditching plans to regulate buy now, pay later (BNPL) companies

The government is considering shelving its plans to regulate BNPL companies like Klarna and Clearpay, due to concerns that providers might exit the UK market, according to a report.

The potential regulation of BNPL was first announced in February 2021. However, since the consultation on draft legislation was published in February this year, there have been warnings that the change could trigger some major BNPL lenders to withdraw from the market, according to a report by Sky News.

How does this affect you?

BNPL activities remain unregulated, so agreements for short-term, BNPL credit aren’t covered by the type of rules that cover credit cards, for example. This means you don’t have the same protections – such as access to the Financial Ombudsman if you have a complaint.

Regulation would also likely involve tighter affordability checks before companies offered you credit.

Why is it a concern if BNPL companies remain unregulated?

Not all BNPL providers do affordability checks, which means people can end up getting BNPL credit that they can’t afford to repay. Under the proposals, there would be better checks before lending.

One of the key benefits for consumers under the proposed changes would be access to the Financial Ombudsman to resolve complaints.

To learn more about BNPL and how the regulation could impact you, read our guide.

  • Warning: Late repayments can cause you serious money problems. For help, contact the MoneyHelper.
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