UK credit union trade body All Together Money has welcomed the introduction of new regulation for the buy now, pay later (BNPL) market, which comes into effect today (15 July).
The new rules bring BNPL providers under Financial Conduct Authority (FCA) supervision, requiring firms to be authorised and subject to the Consumer Duty, while introducing stronger consumer protections including affordability checks, clearer information on repayments and greater transparency around missed payments.
The changes follow rapid growth in the BNPL market, with more than 10 million UK adults using the products in the year to May 2024.
“The introduction of regulation for BNPL products is an important and welcome step for consumers,” said All Together Money CEO Matt Bland. “As these products have grown in popularity, it is right that protections for borrowers have grown alongside them.
“Affordability checks and clearer information will help consumers make more informed decisions about borrowing and reduce the risk of people taking on debt they cannot afford.”
But he added: “We must also consider where consumers who may no longer qualify for some BNPL products will turn for support. There is a risk that some could be pushed towards higher-cost forms of credit if affordable alternatives are not available.
“Credit unions are well placed to help meet this need, providing responsible, affordable lending alongside savings products and financial support that help people build longer-term financial resilience.
“We are also encouraged by the innovation taking place across the affordable credit sector, supported by funding and investment programmes through organisations such as Fair4All Finance, which are helping credit unions modernise and develop products that better meet the needs of today’s consumers.
“As the market adapts to this new regulatory environment, policymakers, regulators and lenders must continue working together to ensure that consumers have access not just to safer credit, but to fair and affordable credit.”
All Together Money is encouraging consumers looking for an alternative to BNPL or higher-cost credit products to explore the support available through their local credit union via its Find Your Credit Union website.
