The Financial Conduct Authority (FCA) mandates buy now, pay later (BNPL) lenders to verify borrowers' affordability. A new consultation proposes that lenders provide support for customers facing financial trouble. Additionally, borrowers will have the option to file complaints with the Financial Ombudsman Service for unresolved issues. These regulations aim to offer consumers transparency and protect BNPL users, aligning with existing protections in traditional lending. The FCA emphasizes the Consumer Duty, requiring financial firms to prioritize consumer interests in product design and communication.
Buy now, pay later lenders must now check that people can afford to repay their loans, a consultation put forward by the Financial Conduct Authority (FCA) says.
Borrowers will also be able to complain to the Financial Ombudsman Service if something goes wrong. The rules, giving consumers more transparency over what this type of borrowing involves, would take effect when buy now, pay later (BNPL) comes under the FCA's remit next year.
The FCA also oversees the Consumer Duty, which requires financial firms to put consumers at the heart of what they do, including when designing products and communicating with their customers.
We have long called for BNPL products to be brought into our remit, so people can benefit from BNPL while being protected. Our regulation will help consumers navigate the lending landscape.
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