The UK government is taking significant steps to regulate the buy-now pay-later (BNPL) market, following a series of consultations and recommendations stemming from the Woolard Review. The latest consultation, launched by the new Labour government, seeks to establish a regulatory framework for BNPL products, particularly those offered by third-party lenders. The draft legislation introduces a new category known as Regulated Deferred Payment Credit (DPC) Agreements, which will be subject to regulation, while agreements directly provided by merchants will remain exempt. Key components of the proposed regulation include enhanced information disclosure requirements to ensure consumers have clear and understandable information about their agreements, and the introduction of a Temporary Permissions Regime (TPR) allowing unauthorized firms to continue operations while seeking full authorization. The consultation is open until November 29, 2024, after which the government will finalize its policy and move towards implementing the new regulations.
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