Clifford Chance

Regulatory developments in the buy-now-pay-later space: HMT consultation on proposed draft legislation for BNPL products

15 February 2023

On 14 February 2023, HM Treasury published a consultation on draft legislation to bring buy-now-pay-later (BNPL) products within the scope of the UK regulatory regime. This follows a policy announcement from February 2021 to bring BNPL products into scope of regulation. The consultation closes for comments on 11 April 2023 and the government plans to lay legislation before parliament when there is time (it says, hopefully in 2023).

At the moment, BNPL products provided to "consumers" are generally unregulated by virtue of an exemption in article 60F(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (the RAO). Article 60F(2) exempts from regulation interest-free agreements repayable in under 12 months and in 12 or fewer instalments. This covers BNPL, as well as other types of short-term credit provided without interest or other significant charge (STIFC – which the government generally uses to refer to more traditional forms of credit offered on larger purchases, often with merchants acting as lender or broker).

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