UK to organize “buy now, and later pay” in legal reform

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The lenders who specialize in “Buy Now Now, Pay Later” will have to adhere to the same rules of banks prevailing under the long -awaited legislation that will be entirely organized by the Financial Conduct Authority.

On Monday, the UK government will provide legislation, more than four years after the previous conservative administration announced plans to regulate the sector.

Under the rules, lenders like clear Clearpay will be asked to verify the ability to bear the costs to shoppers before submitting loans, while borrowers will be able to file complaints to the Financial Grievance Secretary.

“These new rules will protect shoppers from debt traps and give the sector the certainty that it needs to invest, grow, and create job opportunities,” said Emma Reynolds, Secretary of the Treasury.

“Buy now, the wage later turned shopping for millions, but for a long time it works as Western Wild – which leaves consumers exposed.”

The Treasury said it would also reform the consumer credit law in order to create a “modern working framework that reflects how people borrow today.” the Financial technology The industry has long complained that the 51 -year -old system and some of its disclosure requirements were not suitable for the purpose in the digital age.

The “Buy Now” market has flourished, pushing later “-known as BNPL-in recent years, allowing consumers to publish their payments in short-term installments without any benefit. More than 10 million people use the UK product, according to the Treasury.

However, this sector remained unorganized, as service providers were not currently required to operate the ability to withstand potential users. Consumer groups have warned that borrowers are risking the accumulation of indisputable debt levels of late payment fees under the current system.

Lisa Web, of the consumer group that was “good”, said that the ministers were ultimately organizing the sector, but said that the government “also needs to ensure that this would include more marketing transparency and information about the risks of missed payments and credit checks.”

Research commissioned by the Financial Capacity Center, a charitable institution in financial education in the United Kingdom, found that nearly a quarter of these loans have been imposed late payment fees in the six months to December 2023.

“BNPL is without interest an important alternative to high -cost credit for millions of Britons, and we have supported the organization to maintain it safe and accessible since 2020.”

He added, “It is good to see progress in the organization, and we look forward to working with FCA on rules to protect consumers and encourage innovation.”

The United Kingdom announced plans to organize the sector in 2021 and consulted the treasury on the idea in 2023, but later delayed the implementation of the legislation project.