By Daniel Lanyon on Monday 13 February 2023
Buy now, pay later credit products are set to be regulated by the FCA and consumers will have the new right to take complaints to the Financial Ombudsman Service.
Klarna, Zilch and other ‘buy now, pay later’ firms will have to abide by new rules set out by the UK government.
The new regulations, which have been anticipated for some time, will focus on a clamp down on unregulated BNPL creditors to ensure better protection for consumers.
“People should be able to access affordable credit, but with clear protections in place. That is why these proposed regulations are so important,” said Andrew Griffith, economic secretary to the Treasury.
“Today’s summit will also help regulators and banks better understand the best ways to support people who feel boxed in by debt and open up the financial system to people who find it more difficult to access,” Griffith added.
It will mean Buy-Now Pay-Later credit products are set to be regulated by the FCA and consumers will have the new right to take complaints to the Financial Ombudsman Service.
The new regulations will affect up to 10 million borrowers in the UK, the government estimates, from existing unregulated lending.
Philip Belamant, CEO and co-founder of Zilch, says he welcomes the move.
“We have long called for the entire industry to be subject to the same high regulatory standards that we already provide to our millions of customers. A lot of firms have paid regulation lip service but have yet to act - that’s about to change,” he said.
“Today marks a positive day - in the context of the cost-of-living crisis, it’s never been more vital for people to have access to interest-free credit, via responsible organisations that carry out appropriate affordability checks and enable others to do the same through reporting via the major UK Credit Reference Agencies," he added.
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