At the start of 2023, the UK’s buy now, pay later (BNPL) sector was gearing up for new regulations to govern BNPL products and services that could be offered to consumers. After a two-year consultation process, the UK government published, on February 14, draft legislation which would give the Financial Conduct Authority (FCA) power to regulate firms offering certain types of interest-free instalment credit to consumers. It would also protect consumers from unfettered, easy-access lending.
This draft legislation was certainly long-awaited — particularly in light of concerns over rising consumer debt. The popularity of BNPL products surged during the Covid-19 pandemic, with shoppers looking to providers such as Clearpay and Klarna to delay their payments.
