Retail Compass Autumn 2022

Where to next for Buy Now Pay Later?

Published on 12 October 2022

On Monday 20 June 2022, HM Treasury responded to its consultation on proposals to extend regulation to unregulated Buy Now Pay Later (BNPL) products. This consultation closed in January 2022.  The Treasury's response confirmed the scope of regulation will cover BNPL products and short-term interest free credit (STIFC) provided by third-party lenders. 

As well as confirming the scope of regulation for BNPL and STIFC products, the Treasury has also provided clarification on arrangements that will remain exempt from regulation e.g. charge cards, trade credit and invoicing finance.

Further feedback is now being sought as to whether or not the scope is extended to BNPL and STIFC provided by merchants.  The deadline for stakeholders to provide further information was Monday 1 August.

As part of its response, the government has provided its views on the proposed regulatory controls it intends to apply to BNPL and STIFC credit agreements, covering areas such as, advertising and promotions, pre-contractual information and creditworthiness.

What happens next?

  • Towards the end of the year, HM Treasury aims to publish and consult on draft legislation.
  • By mid-2023 following the second consultation, the aim is to lay secondary legislation before Parliament. The FCA at this point, will be able to consult on its approach and the extended regime, after having worked closely with the government. 

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