New regulations for Buy-Now Pay-Later consumers are set to help protect an estimated 10 million customers from unconstrained borrowing while still ensuring those who need it have access to interest-free credit. With more people taking out these credit agreements and the potential risks of consumers being exposed to financial harm; the government is setting out proposed new regulations.
It will mean Buy-Now Pay-Later credit products are set to be regulated by the FCA and consumers will have the new right to take complaints to the Financial Ombudsman Service. Under new rules providers will have to give consumers key information about their loans and issue credit that is genuinely affordable.
Economic Secretary to the Treasury, Andrew Griffith said: “People should be able to access affordable credit, but with clear protections in place. That is why these proposed regulations are so important.
“Today’s summit will also help regulators and banks better understand the best ways to support people who feel boxed in by debt and open up the financial system to people who find it more difficult to access.” A summit of banks and debt charities will also be convened today by the City Minister who will urge the group to work together to improve financial education, ensure affordable credit is available to people who struggle to access it and remove the barriers which people with disabilities, like sight loss, can face when accessing financial services.
The latest “Financial Inclusion Policy Forum” will take place at the Money Advice Trust in Birmingham, bringing together the leading lights from the financial services sector, charities, consumer groups and regulators. They will discuss the best ways to ensure access to affordable credit and remove barriers which people with disabilities, like sight loss, can face when accessing financial services.
Buy-Now Pay-Later can be a quick, easy, and helpful way for people to manage their finances, allowing them to spread the cost of a full purchase over time without paying interest. However, because many of the agreements aren’t currently regulated and rely on minimal credit checks, lenders are not required to give key information to borrowers, and some people may end up borrowing more than they can affordably repay.
For those who are facing financial difficulty, new contracts awarded by the Money and Pensions Service this year are expected to provide free debt advice to more than 1.5 million people in England over the next three years. During the forum the City Minister will also discuss the most effective ways to help those in financial difficulty.