Buy Now Pay Later (BNPL) Consultation
What has happened?
In February 2023, HM Treasury launched its long-anticipated consultation on the future regulation of the buy now, pay later (BNPL) sector. The consultation proposes subjecting BNPL firms to BNPL regulation and giving BNPL consumers the right of access to the Financial Ombudsman Service.
What are the key points of the consultation?
This consultation will be open for eight weeks, with responses invited by 11 April. Once the Government has considered stakeholder feedback to this consultation, it will consider any necessary changes to the draft legislation and intends to publish a consultation response which will set out the anticipated key milestones for BNPL regulation. Following that, the Government will lay legislation when Parliamentary time allows, with the ambition that this will be during 2023.
The Government proposes to put in place a Temporary Permissions Regime (TPR) which will allow firms to continue to operate until they are fully authorised. The intention is that firms in the TPR will be deemed authorised under part 4A of FSMA by the FCA, will be permitted to undertake the relevant regulated activities relating to newly regulated agreements, and will need to comply with the relevant FCA rules.
In addition, the FCA will be able to supervise these firms and take enforcement action against them if necessary. The relevant regulated activities will be:
• entering into a regulated credit agreement as lender,
• exercising, or having the right to exercise, the lender's rights and duties under a regulated credit agreement, and
• credit broking (for domestic premises supplier merchants that offer newly regulated agreements)
The Government considers that proportionate BNPL regulation of newly regulated agreements includes a tailored application of some of the FCA's current rules on creditworthiness assessments. The Government's view is that it is for the FCA to decide how the current rules need to be tailored for these products.
How can we help you?
Thistle Initiatives has supported firms for over 10 years as a trusted compliance and regulatory advisor. In addition to assisting you as and when our team of specialists can serve as your right hand in a meeting and complying with regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.
Are you looking for help with your FCA BNPL regulation arrangements or more general regulatory questions? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 0207 436 0630 or sending an email to info@thistleinitiatives.co.uk.