HM Treasury Consults on Regulating Buy Now Pay Later

HM Treasury has begun consulting on draft legislation regulating Buy Now Pay Later. HM Treasury is proposing to bring forward secondary legislation that would bring BNPL into Financial Conduct Authority regulation as soon as possible. The consultation sets out HM Treasury's intended policy approach to regulation along with the draft legislation. HM Treasury explains that the proposed legislation aims to ensure people using BNPL products receive clear information, avoid unaffordable borrowing, and have strong rights when issues arise.

HM Treasury notes that this approach will maintain access to a popular product while adding safeguards. The approach has been informed by five key principles:

• Consumers must have access to simple, clear, understandable and accessible information.
• Consumers should have protection when things go wrong.
• Consumers should only be lent to if it is affordable.
• Regulation should be proportionate to ensure continued access and choice.
• Regulation must be introduced urgently to ensure consumers are protected and the sector has certainty.

The consultation also responds to feedback HM Treasury received to its previous consultation that ran between February and April 2023. The deadline for comments is November 29, 2024. After reviewing feedback, HM Treasury aims to bring forward the legislation as soon as possible.

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