UK regulators Financial Conduct Authority (FCA) has issued new recommendations to regulate the future buy (BNPL) market.

The new FCA proposal may see future legislation requiring lenders to check that people can afford BNPL loans and provide support when clients get stuck in financial difficulties. If the new rules come into play, BNPL borrowers will also be able to file a complaint with the Financial Ombudsman Service if problems arise.

When BNPL remittances in 2026, the new rules will take effect FCA Research Among the unregulated BNPL, about 20% of UK adults (about 10.9 million) have been used once in the 12 months to May 2024, up from 17% (8.8 million) in 2022.

The rapid growth in issuances may be largely driven by the fact that the minimum credit check is currently required. transmission The study found that, therefore, one in six (16%) of consumers in the UK choose BNPL. But it also found that 13% of people don’t know how to use BNPL for small, daily purchases affect their credit reports, while 26% of UK adults prefer BNPL over credit cards rather than daily expenses.

These findings highlight that while some people may find that BNPL is less attractive under stricter regulatory lenses and therefore require stricter inspections, more protections are needed to ensure consumers’ safety.

According to research by BNPL provider clearpayIn fact, nearly half of British adults (48%) are more likely to use BNPL once regulated. It also found that 71% believed that BNPL must be bound by UK financial legislation, suggesting that the announcement will help promote trust among consumers.

Protect consumers from BNPL chaos

Neil KadagathurCEO of the lender Creditspringwelcomes the new BNPL regulations: “BNPL is a product that works in theory, but in reality, allows growth with minimal meaningful safeguards.

“The problem is that it is designed and sold as a risk-free solution for everyday spending, but in reality, it can put people in debt without fully understanding the consequences. Ultimately, any regulations that protect and inform consumers are always welcome.

“It is important, however, to get a greater understanding of credit in the UK – 40% of the country’s population saves zero, and as long as this is true, fair, transparent, transparent and affordable short-term credit options are needed.

“The subscription financing loan model is a way for consumers to essentially ensure that they are truly unexpected costs of their lives, which can derail people and allow debt spirals to appear.”

Market mergers are coming?

“As the FCA is tightening, with regulations around the BNPL division, providers will be under increasing pressure to enhance credibility and affordability assessments and demonstrate strong consumer protection.” Richard PageSenior Director of Risk for Independent Financial Services Consulting and Credit Risk Expert Broadstone.

“This marks a significant shift in the relatively light-touch model of operations by BNPL, with a greater emphasis on affordability checks, credit reports and fair treatment of borrowers.

“In addition, the extension of Article 75 protection for consumers will mean that the company will be responsible for the retailer’s defective or undelivered goods, thus having more responsibility for the risk and compliance team to oversee the merchant partner.

“All of these combinations will pose a challenge for BNPL lenders, especially those in smaller markets, as these companies will need stronger data capabilities, credit risk assessment and monitoring tools to meet FCA expectations. These pressures are likely to trigger smaller players in the market to absorb these new needs among those with greater capabilities and capabilities to meet these new needs.” ”