The UK government is moving towards regulating Buy-Now, Pay-Later (BNPL) lending, following a lengthy consultation period that began after the Woolard Review raised concerns about unregulated credit facilities. The draft legislation introduces a new category of regulated credit agreement called the "regulated deferred payment credit agreement," which aims to provide consumer protections while maintaining access to interest-free credit. Notably, agreements under £50 will fall under this new regime, with certain exemptions for merchant loans and specific types of financing. The consultation period is short, closing on November 29, 2024, and while the government has promised a proportionate approach, the effectiveness of the regulations remains to be seen. Key features include the removal of some prescriptive requirements of the Consumer Credit Act, oversight by the Financial Conduct Authority (FCA), and a Temporary Permissions Regime for unauthorised firms. The final legislation will take time to implement, with full regulation expected a year after the new laws are passed.
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