The newly elected Labour government in the U.K. is preparing to implement stricter regulations for the "buy now, pay later" (BNPL) industry, which includes companies like Klarna and Block's Afterpay. A Treasury department spokesperson indicated that details on the updated regulatory framework will be released shortly, emphasizing the need for consumer protection and certainty within the sector. This move comes after a prolonged delay in legislative action that began in 2021, following a review by former Financial Conduct Authority chief Christopher Woolard, which revealed that over 10% of BNPL customers were in arrears. The BNPL model allows consumers to make purchases and defer payments, often leading to debt accumulation, especially among younger individuals who may engage with multiple providers. The lack of standardization in services and fees has raised concerns among campaigners, prompting calls for regulation to safeguard consumers from potential financial pitfalls.
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