BNPL Regulations Revived by New UK Government

Great Britain is reportedly resurrecting plans to regulate buy now, pay later (BNPL) providers.

It’s happening under the country’s new Labour leadership, CNBC reported Thursday (July 25), citing a government spokesperson.

“Regulating Buy Now Pay Later products is crucial to protect people and deliver certainty for the sector,” the Treasury spokesperson told CNBC via email.

Earlier this week, Tulip Siddiq, new economic secretary to the U.K. Treasury, told Parliament that new government is “looking to work closely with all interested stakeholders and will set out its plans shortly.”

As CNBC notes, these efforts come after numerous delays to implementing BNPL rules in the U.K., something the government first attempted three years ago. That came after a review by former Financial Conduct Authority head Christopher Woolard showed that more than 1 in 10 BNPL customers were in arrears.

“Changes are urgently needed: to bring buy now, pay later into regulation to protect consumers; to ensure that there is secure provision of debt advice to help all those who may need it; and to maintain a sustained regulatory response to the pandemic,” Woolard said at the time.

Meanwhile, regulators in the U.S. are also preparing to impose new regulations on the installment payments sector.

A Consumer Financial Protection Bureau (CFPB) rule classifying BNPL as credit card providers takes effect next week, which means these companies will have to provide legal protections and rights delivered by conventional credit cards.

This has led an industry group to ask for more time, writing to CFPB Director Rohit Chopra earlier this month in hopes of getting the deadline moved to Jan. 1 of next year.

In the letter, the American FinTech Council argued that “given the complexity and variation in business models, lender practices, and partnerships with merchants, as well as differences in the levels of preexisting compliance with the provisions enumerated in the Interpretive Rule by BNPL lenders, it seems prudent to adopt an extended compliance period.”

The new regulations would come at a moment when, per research by PYMNTS Intelligence, 79% of consumers say they are “very” or “extremely” satisfied with BNPL experiences.

Additional research shows that consumers are becoming more aware of BNPL and other installment payment options, while merchants and acquirers both agree that offering pay later plans can increase sales and drive revenue growth.