The government is reportedly set to abandon its plans to impose stricter regulations on Britain’s rapidly expanding ‘buy now pay later’ (BNPL) industry, according to Sky News.
Recent discussions between Treasury officials and key industry players revealed that several major BNPL providers might exit the UK market if faced with stringent regulations. In February, the UK Treasury began a long-awaited consultation on the Financial Conduct Authority’s (FCA) oversight of the surging BNPL sector. Among the proposals were requirements for clearer credit agreements outlining the deal terms at the point of agreement and ensuring that retailers adequately inform consumers about the associated risks. Additionally, the consultation suggested that section 75 of the Consumer Credit Act could apply, making BNPL providers jointly responsible for contracts with retailers, similar to credit card companies.
Innovate Finance, a fintech industry body, criticized the proposals, asserting that they could impose even more onerous requirements than those currently placed on credit cards.
While a final decision has not yet been made, sources indicate that the Treasury is inclined to delay the proposals due to concerns that stringent regulations could limit the availability of low-interest BNPL products.
Potential delays in BNPL regulation may trigger backlash from consumer advocacy groups, which have long pushed for stricter oversight due to fears that the industry is contributing to rising debt levels among financially stressed consumers. The consumer group Which? has especially advocated for enhanced protections, highlighting research suggesting that many shoppers perceive BNPL options as budgeting tools rather than credit.