The Financial Conduct Authority, the UK’s financial regulator, has been carefully monitoring the market of short-term Buy Now Pay Later (BNPL) loans, i.e. deferred e-commerce payments. This payment method has recently become very popular but in the long run it may cause consumers to become financially over-committed, the economists warn. The FCA authorises BNPL firms in response to the announcement of the British Parliament that the rules for granting short-term loans are to be tightened, as we reported here: https://www.fintech.gov.pl/en/komunikaty/367-aktualnosci-artykuly-en/1030-tougher-rules-for-bnpl-in-the-uk.
The FCA has recently published a warning addressed to unauthorised BNPL firms. The warning also relates to unfair BNPL adverts and the failure to provide adequate information about the consequences of taking out a short-term loan and the consequences of default. Entities violating the regulations may face criminal charges. Action has already been brought against more than 4 thousand firms in the UK. The FCA has announced further inspections of the services to enforce compliance with the applicable rules.
For more details on the current status of BNPL loans, please visit: https://www.finextra.com/newsarticle/40835/fca-warns-against-unlawful-bnpl-promotion