StepChange reaction to HM Treasury BNPL consultation

_{21 October, 2021}

StepChange Debt Charity is pleased to see that today’s consultation paper issued by HM Treasury on how to regulate the Buy Now, Pay Later (BNPL) market picks up on all the most important elements that can cause consumer detriment.

The consultation recognises that the “frictionless” process so valued by retailers to achieve smoother sales and increased volumes can be a driver of harm for some consumers, and makes pre-contractual disclosure and ongoing consumer protection so important.

StepChange argued these points to the FCA’s Woolard Review last year. That review resulted in the FCA’s recommendation, and the Government’s agreement, to regulate BNPL. Today’s consultation marks a watershed in the recognition that BNPL is credit, with implications for the need for adequate consumer protection against harm, matching existing Consumer Credit Act and Financial Conduct Authority protections.

While the precise scope and nature of protection is under consultation, the fact that this important principle will underpin the future of the BNPL market should help to offset the risk of unnecessary additional debt problems that could arise from the rapid acceleration of the BNPL market.

Peter Tutton, StepChange Head of Policy, Research and Public Affairs, said:

"We look forward to contributing our formal response to the consultation, but already we can see that the Government is taking seriously its promise to regulate the BNPL market, and recognise that BNPL is credit, which has the potential to cause harm without adequate consumer protections.

"Where there are some important choices to be made – such as how widely the definition of BNPL should be drawn, and what the regulatory position of retailers should be – we would like to see the protection of consumers being the first and guiding principle of the final framework. We hope the introduction of regulation can be implemented at pace, given the rapid rise of BNPL."

Notes to Editors

• The open consultation can be viewed on the Government’s website
• StepChange’s response to the Woolard Review is available here
• The findings of the Woolard Review can be found on the FCA’s website

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