Letters: Regulate Now or Pay Later
[Re: BNPL set to hit $607bn by 2026 despite regulatory scrutiny, analysts predict, yesterday]
Against a tumultuous economic backdrop, the need for robust and proportionate regulation of BNPL is arguably more urgent today than it was when the Woolard Review was published at the start of 2021. The Treasury’s response is therefore overdue, but welcome.
In many ways, the response recognises how the application of the FCA’s rules will accommodate innovative practices whilst ensuring consumer protection is central. BNPL firms must now be licensed and the way their products are described, advertised, and accessed will now rightfully be subject to FCA rules.
However, despite the Economic Secretary to the Treasury John Glen announcing the reform of the 50-year-old Consumer Credit Act last week, the Government intends to apply elements of this legacy legislation to BNPL. This cherry picking approach risks inconsistency for consumers and confusion for firms. Meanwhile, BNPL users will now be exposed to the other ills of the incumbent credit regulatory regime, like the much complained about Financial Ombudsman Service.
It is vital that the Treasury’s response today is just a comma, and not a full stop. There is much more work needed to ensure that BNPL is regulated in a way that truly protects and serves consumers.
Charlie Mercer