Latest news with #Clearpay
Yahoo
21-07-2025
- Business
- Yahoo
FCA plans to regulate BNPL-industry reaction
The FCA has long been calling for BNPL to be regulated-and finally there is light at the tunnel. According to the FCA, BNPL lending has grown in the UK from £60m in 2017 to more than £13bn in 2024. FCA research on unregulated BNPL found 1-in-5 (20%) UK adults (10.9 million) had used it at least once in the 12 months to May 2024, up from 17% (8.8 million) in 2022. Despite not yet having regulatory oversight of BNPL firms, the FCA has already secured changes to unfair contract terms and warned firms about misleading advertising. BNPL regulation-industry reaction A Clearpay spokesperson commented: 'With the FCA publishing its proposed rules to regulate Buy Now, Pay Later (BNPL), the 12-month countdown is now on. We will support the FCA as it consults on and finalises its specific rules for the sector. Coming into force on 15 July 2026, regulation will establish a consistent operating environment and clear compliance standards for all providers. Clearpay has always called for fit-for-purpose regulation that ensures consumer protection, provides much-needed innovation in consumer credit and supports the UK's thriving FinTech sector. 'Clearpay research highlighted that nearly half of UK adults (48%) are more likely to use BNPL once regulation is passed, and with 71% believing that it is important for BNPL to be subject to UK financial legislation, today's announcement will help foster trust among consumers. It will also create a more sustainable foundation for the future of BNPL as it continues to grow as an everyday payment option for consumers.' Hyder Jumabhoy, Partner at international law firm White & Case LLP and Global Co-head of its Financial Institutions Industry Group The FCA's tightening of regulations around the BNPL sector in the UK will subject lenders to more robust consumer protection and tougher credit check requirements. Alongside the rise in interest rates pushing up the cost of capital to providers, compliance with these changes is likely to increase operating costs and squeeze margins further for many BNPL providers. This will create pressure on BNPL firms to scale-up their compliance functions, but it could also drive a wave of consolidation in the market, especially among smaller providers. Challenger banks could be particularly active in this space, seeking to enhance their consumer lending propositions by acquiring BNPL platforms with established merchant networks and user bases. Sarah Pritchard, deputy chief executive, FCA 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 their financial lives, with checks on whether they can afford to repay, support when things go wrong and access to the right information to make informed decisions. We're mainly relying on existing requirements, including the Consumer Duty, rather than proposing to make lots of new rules, supporting growth and allowing firms to innovate. Samuel Riordan, Executive Director of banking & payments, Capco The new BNPL protections prioritise stronger affordability checks and complaint options for consumers if something goes wrong. The challenge will be ensuring this doesn't erode the core experience that has driven BNPL's popularity. Many BNPL firms will already have plans underway: developing more robust and exhaustive affordability checks, enhancing refunds and dispute management processes, and embedding new expertise for complaints submitted to the Financial Ombudsman. This is a big step towards enhancing consumer protections for a fast-growing product, that has attracted millions of consumers across the UK due to its seamless checkout experience and customer centric flexibility. The balance will need to be struck between strengthening the regulators controls over a new part of the market and ensuring customers' choice and experience remains at the heart of these innovators business models. Richard Pinch, Senior Director of Risk, Broadstone. As the FCA moves to tighten regulations around the Buy Now Pay Later (BNPL) sector, providers will be under increasing pressure to enhance creditworthiness and affordability assessments and also demonstrate robust consumer protections. This marks a significant shift away from the relatively light-touch model BNPL firms have operated under, and places greater emphasis on affordability checks, credit reporting and fair treatment of borrowers. In addition, the extension of Section 75 protections for consumers will mean firms will be jointly responsible with retailers for faulty or undelivered goods placing even more responsibility on risk and compliance teams to oversee merchant partners. All this in combination will pose a challenge to BNPL lenders, particularly those at the smaller end of the market, as those firms will need stronger data capabilities, credit risk assessment and monitoring tools to meet the FCA's expectations. It is likely that these pressures could trigger consolidation within the market as smaller players are absorbed by those with greater capacity and finances to meet these new demands. "FCA plans to regulate BNPL-industry reaction" was originally created and published by Retail Banker International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. 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Daily Mirror
18-07-2025
- Business
- Daily Mirror
Shoppers will be blocked from using buy now, pay later under new crackdown
The FCA has launched a new buy now, pay later consultation into how it can protect customers from taking on debt that they cannot afford Some shoppers will be stopped from using buy now, pay later (BNPL) under stricter affordability checks which are due to come into force next year. The Financial Conduct Authority (FCA) has launched a new consultation into how it can protect customers from taking on debt that they cannot afford. BNPL lets shoppers buy items on credit and pay for it later, usually spread out over several months, interest-free - but debt charities have raised concerns that some people end up taking out loans that they cannot afford. You can get charged late fees if you miss a BNPL payment and some firms also report missed payments to credit referencing agencies. Under new proposals, BNPL providers will have to check that people can afford to repay their loans and offer support if they get into financial difficulty. Borrowers will also be able to complain to the Financial Ombudsman Service if something goes wrong. The rules would come into effect when BNPL comes under FCA remit next year. According to FCA research, one in five (20%) UK adults – roughly 10.9 million people – used BNPL at least once in the 12 months to May 2024. This is up from 17% in 2022. In May 2024, 2% of UK adults (1.1 million people) had £500 or more outstanding unregulated BNPL debt, and 11% of UK adults (5.3 million people) had £50 or more outstanding. The FCA consultation is open for feedback until September 26, 2025, and the rules would come into force from July 15, 2026. Firms will have six months from the date the regime comes into force to apply for full authorisation. Sarah Pritchard, deputy chief executive at the FCA, said: '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 their financial lives, with checks on whether they can afford to repay, support when things go wrong and access to the right information to make informed decisions. 'We're mainly relying on existing requirements, including the Consumer Duty, rather than proposing to make lots of new rules, supporting growth and allowing firms to innovate.' A Klarna spokesperson said: 'After five years of constructive work with HMT (HM Treasury), we're entering the home straight to make BNPL regulation a reality – a major win for UK consumers. 'We're looking forward to working with the FCA on rules that protect consumers while keeping choice and innovation at the heart of the UK credit market.' A Clearpay spokesperson said: 'We will support the FCA as it consults on and finalises its specific rules for the sector.' The spokesperson said regulation 'will establish a consistent operating environment and clear compliance standards for all providers'. They added: 'Clearpay research highlighted that nearly half of UK adults (48%) are more likely to use BNPL once regulation is passed, and with 71% believing that it is important for BNPL to be subject to UK financial legislation, today's announcement will help foster trust among consumers. 'It will also create a more sustainable foundation for the future of BNPL as it continues to grow as an everyday payment option for consumers.'
The Sun
17-07-2025
- Business
- The Sun
Millions of shoppers relying on buy now, pay later schemes to get stronger protections under new rules coming next year
MILLIONS of shoppers who rely on buy now, pay later schemes will gain stronger protections under new rules launching next year. For the first time, the short-term financing — known as BNPL — will be regulated by the Financial Conduct Authority (FCA). Lenders will be forced to check if borrowers can afford repayments and offer support if they fall behind. BNPL allows shoppers to spread the cost of goods without interest, but rising debt has caused concern. FCA research reveals 20 per cent of UK adults used BNPL last year, with many owing hundreds in unregulated debt. But from next July, firms must carry out strict affordability checks and explain repayment terms clearly. Shoppers will be told upfront about fees, missed payment consequences and credit score impacts. If borrowers hit financial trouble, lenders must step in with tailored support and advice. Complaints can also be escalated to the Financial Ombudsman Service, offering fair resolutions for disputes. It brings BNPL under Section 75 of the Consumer Credit Act, allowing shoppers to claim refunds or compensation for faulty goods from lenders if retailers fail to deliver. Sarah Pritchard, deputy chief executive at the FCA, said the regulation would allow consumers to 'make informed decisions'. Market leaders Clearpay and Klarna support the move. 3 Klarna's new shopping app that lets you pay in three instalments at any retailer explained FIRMS' CARD COMPO BID VISA and Mastercard face a multi-billion-pound class action lawsuit over allegedly unlawful card payment fees, in one of the largest competition claims. Businesses accepting their debit or credit cards could secure compensation for unfair multilateral interchange fees (MIFs), described as a 'tax on business' by Stephen Allen, director of the class representatives. MIFs make up about 90 per cent of monthly service fees. The claim, funded by Bench Walk Advisors, covers fees charged since 2019 and is open to all UK businesses. £15M 'JET RAP EASYJET boss Kenton Jarvis has slammed French air traffic control strikes for causing disruption and £15million in extra costs. This month's walkouts affected thousands of passengers. Mr Jarvis urged the French government to improve air traffic operations, recruitment and technology. Despite challenges, easyJet recorded a £286million pre-tax profit for the quarter, driven by strong demand and resilience. WE DUN WELL 3 DUNELM has reported a 3.8 per cent rise in annual sales, with summer demand strong despite pressure on household budgets. Seasonal ranges, including outdoor living products, performed well. But the firm still warns of no clear recovery in consumer confidence. Pre-tax profits for 2025 are expected to hit £210million, in line with forecasts. Its shares rose by 1.5 per cent, with analysts highlighting its digital investments.
BBC News
17-07-2025
- Business
- BBC News
Buy now, pay later: Stricter checks will block some shoppers
Shoppers using buy now, pay later (BNPL) will need to pass stricter affordability checks under new rules coming into force next means some shoppers will be refused this type of credit and the ability to splash out on something potentially unaffordable in a few clicks could be slowed say it will prevent people from taking on too much debt and being caught out by late payment Julie Rowbottom told the BBC that it was "easy to fall into a trap" with this kind of borrowing. She said having the option at your fingertips made life easier, but the debt "could easily and quickly mount up" so she had managed her finances carefully to avoid falling into a spiral. BNPL offers shoppers interest-free credit, allowing them to buy something immediately, then repay in 12 or fewer instalments within 12 months or operators such as Klarna and Clearpay have emerged and are offered as a payment method by many of the UK's biggest 11 million people in the UK have used buy now, pay later in the last year, the City watchdog - the Financial Conduct Authority (FCA) - survey found 30% of adults aged 25 to 34 had used it at least once in the 12 months to May 2024. The most common use was for "lifestyle and beauty purchases" and "treating myself or other people", it is currently unregulated which means that lenders do not need FCA approval to operate. 'Wild west' Charities have made repeated demands for extra protection, after seeing increasing numbers of people get into financial Brownridge, chief executive of StepChange Debt Charity, described the new proposals as "a significant step forward" in bringing the sector in line with other types of credit."Buy now, pay later users are twice as likely as all credit users to borrow to cover essential bills, and our research also found that BNPL is now as common as using an overdraft amongst UK adults," she recent days legislation has passed which means the FCA can now consult on its plans to regulate the sector - after years of promises from politicians to control the "wild west" of plans should lead to upfront checks on affordability, as well as faster access to refunds for consumers, and the right to complain to the Financial should also lead to clear information about cancellation rights, charges and any impact on credit ratings if a payment is 10 years, regulators estimate consumers will be £1.8bn better off as a result, while providers' profits will drop by £1.4bn owing directly to fewer it said it wanted to give lenders "flexibility" over how they applied the new rules, including affordability could see different lenders using different ways to test if people can cover the Walters, interim director of consumer finance at the FCA, said: "We are not prescribing how firms do it, because digital journeys will vary. But the firms must carry out an affordability check to ensure that consumers can afford to repay that borrowing."Credit is not right for everybody. There will potentially be consumers who will not be able to access this product and firms can signpost them to other support like debt advice." 'Major win for consumers' Leading providers have said they are fully supportive of regulating the sector in the UK, but it must allow companies to innovate while also protecting consumers.A spokesman for Klarna said: "After five years of constructive work with the Treasury, we're entering the home straight to make buy now, pay later regulation a reality - a major win for UK consumers. "We are looking forward to working with the FCA on rules that protect consumers while keeping choice and innovation at the heart of the UK credit market."However, the proposals come in the same week as Chancellor Rachel Reeves said less regulation was needed in financial services. The FCA said some of the buy now, pay later protection will come under current FCA regulation on the FCA's plans will run until late will be a temporary regulation regime in place before new rules take effect next July. This means firms will need to follow FCA rules and will be able to continue to trade before they are fully authorised.
Yahoo
13-07-2025
- Yahoo
Are we there yet? Parents ‘snap up items to keep children occupied on journeys'
Many adults may recall turning to guessing games or colouring books when they were children to keep themselves entertained on long car journeys – but new research suggests many parents are now spending significant sums on an array of gadgets to help prevent boredom kicking in. Some (98%) of parents surveyed said they had bought items in the past year to help make travelling with their children easier, according to buy now, pay later provider Clearpay. The research was released as many families prepare for summer holiday getaways. It calculated that some parents could find themselves spending as much as £336 per child, based on the average amounts parents said they had spent on popular items such as children's luggage, headphones, tablets and gaming devices, travel-friendly toys, books, snack packs, drinks bottles, travel pillows and cushions, chargers and tech accessories, downloadable content, activity books and colouring supplies, card games and child-friendly maps. Clearpay said its own data points to a rise in purchases of items that could keep children entertained while travelling, with figures covering March 17 to June 17 showing a quarterly spending increase on items such as children's ride-on suitcases, character headphones, travel snack boxes and water pen books. Nearly a third (32%) of parents surveyed said their children actively ask for travel items and more than one in seven (15%) plan to make social media content featuring the items they have bought. More than three-quarters (79%) of parents said buying children's travel items had had an impact on their regular household spending. Rich Bayer, UK country manager at Clearpay, said: 'Anyone who's travelled with children knows the value of keeping them happy en route – and parents are investing in everything from noise-cancelling headphones to snack packs to make the journey smoother. 'These items have become essential purchases for many parents before they head off on well-earned breaks. Holiday spending can add up, so setting a budget for the different elements of a trip can help ensure that you're spending what you can afford.' Clearpay commissioned OnePoll to survey 2,000 parents with a child aged under 18 across the UK in June.
