Ex-Financial Conduct Authority boss worried on BNPL regulation slowdown
As the cost of living continues to rise, pressure is mounting on the UK government to push ahead to regulate the buy-now pay-later (BNPL) finance industry.
And former Financial Conduct Authority (FCA) boss Chris Woolard has stepped up the call for “urgent” regulation in the sector but warned the speed in the process had slowed since January.
The author of the landmark Woolard review of the BNPL sector told CityAM: “The initial Treasury response committing to regulate BNPL was incredibly quick and primary legislation amended.”
But he noted that while the FCA is keen to regulate the sector, it has to wait for the results of a Treasury-led consultation, which closed in early January.
He said: “The pace has slowed post-consultation, [so] it is important that the FCA is granted the necessary powers to create and enforce rules that will protect customers.”
BNPL products have leapt in popularity in the past two years, particularly in the fashion retail sector, as shoppers look to spread the costs of purchases across instalments.
But concerns have grown over the unregulated nature of the sector as prices and inflation continue to rise. Data this week showed nearly 10% of consumers have now used the products to buy essentials, according to Hargreaves Lansdown.
A spokesperson for the watchdog also told CityAM that the rising cost of living had “underscored the need for buy-now pay-later products to come into regulation.”
“It is vital the law, which sets our remit, adapts as the market innovates,” the spokesperson added.
BNPL giant Klarna told CityAM it was acting on the recommendations of the Woolard review as it waited for the Treasury to publish the results.
“Regulation can’t come soon enough to protect consumers as more and more providers enter the space,” Klarna said.
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