Buy Now Pay Later (BNPL) customers in the UK will start getting a more transparent layer of protection after the UK Treasure Department announced its plan to introduce a bill insuring BNPL users’ rights. Lenders of BNPL services will be required to be licensed by the FCA, once the bill gets approved. Furthermore, borrowers will be able to file complaints against BNPL providers to the Financial Ombudsman Service.
John Glen, the Economic Secretary to the Treasure, commented that setting high standards for this “innovative market in the UK” will result in higher consumer protection and a safer market overall.
Due to this sharp rise in popularity the Treasury department thinks that the probability of potential risks for consumers will rise. The department highlighted some of the requirements that lenders will have to adhere to once the legislation is put into action. Amongst these is are demands for carrying out affordability checks (making sure loans are affordable), and fair and correct BNPL advertisement campaigns.
In recent years, the BNPL sector has boomed, and is continuing to do so, not only in the UK but in other major nations. Currently the UK’s plan is to push the legislation for approval by the end of 2022.