Oh UK Plans to work with lenders on a “buy now, pay later” model (PNPL) The government said on Monday that it would test the payment ability of customers, get approval from the Financial Conduct Authority (FCA) and ensure that advertisements for their offers are fair and clear.
Unrestricted BNPL companies offer interest-free short-term loans to pay the price of products in installments, and, according to the government, are becoming popular.
The British government said it would issue a consultation on legislation for the sector by the end of this year and then regulate the text with specific rules by mid-2023.
Martin Lewis, founder of MoneySavingExpert.com’s consumer campaign team, said progress was being made to ensure that formal verification was “painfully slow”.
“Buy now, then pay is often insidiously marketed as a simple payment option … it’s not. It’s credit,” Lewis said.
In February, the FCA asked BNPL Clearpay, Klarna, Laybuy and Openpay operators to revise their contracts after finding potential harm to customers. The body had to use the UK Consumer Rights Act.
BNPL companies charge online retailers for each transaction.
Gary Rohloff, co-founder of Laybuy, said the company has always wanted proportional rules, which reflect the game’s low risk and support the government’s approach.
Britain announced last week that it would update its decades-old consumer credit law to ease the rules and cut costs, with a public consultation later this year.
(By Elizabeth Piper and Hu Jones)
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