The government is poised to shelve plans to crack down on Britain’s fast-growing 'buy now pay later' (BNPL) industry, Sky News learns.
According to the report, Treasury officials have been told during recent talks with the industry that a number of its biggest players could quit the UK market if they are subjected to "heavy-handed" regulation.
The UK Treasury in February commenced its long-awaited consultation on the FCA’s regulation of the booming buy now, pay later sector. Among the proposals set out by the regulator were for credit agreements laying out the terms of deals when people take them out, and for retailers promoting the services to ensure people understand the risks. The consultation also suggested section 75 of the Consumer Credit Act should apply, making BNPL providers jointly liable for the contract with the retailer in the same way that credit card providers are.
Fintech industry body Innovate Finance slammed the proposals, arguing that the measures would be more onerous than those that apply to credit cards.
One source told Sky News that a final decision had yet to be taken but that the Treasury was leaning towards kicking the proposals into the long grass, amid Whitehall concerns that it could curb the availability of low-interest products.
Delays to BNPL regulation are likely to spark a furious response from consumer campaign groups, which have long campaigned for a crackdown on the practice amid concerns that the industry is piling up debt among cash-strapped consumers. Consumer group Which? in particular, has called for stronger safeguards after publishing research which indicates that shoppers view BNPL products as budgeting solutions rather than credit.