The Financial Conduct Authority (FCA) recently proposed brand new protections covering buy now, pay later (BNPL) borrowers to support BNPL coming under the UK regulator’s oversight next year.
The suggested standards would insist that lenders check that applicants can afford to make repayments on BNPL loans. It would also require them to provide borrowers with support should they find themselves in financial difficulties and let borrowers lodge complaints with the UK’s Financial Ombudsman Service.
From individuals securing a personal loan to businesses applying for loans for architects and accountants, borrowers seeking to secure finance must pass an eligibility check based on the details they provide, along with a further check that assesses their credit history.
The recent proposals were outlined in an FCA press release and will see the same level of protections that are currently available for several other lending types extended to BNPL borrowing.
In the release, Deputy Chief Executive for the financial regulator, Sarah Pritchard, commented that for some time the FCA had requested that BNPL borrowing should be brought within its remit, allowing people to have protection while benefiting from buy now pay later products.
She added that the updated regulations that require affordability checks and access to information that promotes informed decision-making will help borrowers navigate their finances and provide support if things go wrong.
According to the FCA, consumer groups, lenders of BNPL products and other parties involved can now provide feedback on the new proposals this autumn.
