UK toughens BNPL regulation, will require ‘affordability checks’

Buy now, pay later lenders in Britain will be required to carry out “affordability checks” on customers under changes to be legislated by the UK government, as regulation tightens around instalment loans globally.

Detail on what is actually required to assess affordability will be determined by the UK Financial Conduct Authority, after a consultation to begin in the second half of calendar 2023. Clearpay, Afterpay’s UK subsidiary, will make no changes to its current process for onboarding customers until after that process, if at all.

This accepts arguments made by leading BNPL players in the consultation that in-built features such as stopping any late payer from transacting until they are up-to-date provides better consumer protections than credit cards. Klarna said the UK move, which will also lead to BNPL products being brought under consumer credit regulations, “will raise standards and consumer protections across the sector” and capture “traditional banks disguising high-interest products as BNPL.”

'To impose rules.' 'Affordability'. Proofreading ftw.

that should be up to the customer not the government besides there is already a limit thats imposed by bnpl companies.

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