BNPL Regulation in the UK Key Changes and Compliance Steps.pdf

The UK Government has announced plans to regulate Buy Now Pay Later (BNPL) services, addressing risks through new legislation published on 14 February 2023. Key changes include the narrowing of the 60F exemption, stricter requirements for financial promotions, and the introduction of creditworthiness assessments. While merchant-provided credit and credit broking retain some exemptions, BNPL providers must register with the FCA under the Temporary Permissions Regime (TPR) to continue operating. Non-compliance will result in suspended operations and a requirement to undergo full FCA authorisation.

1. Introduction to BNPL Regulation
Buy Now Pay Later (BNPL) Agreements to Become Regulated in the UK
UK Government’s consultation published on 14 February 2023 aims to
regulate BNPL services, addressing risks in the industry and introducing
draft legislation.

2. Scope of Regulation
BNPL Services: Typically used
online for low-value items, involving
a third-party lender.
Short-Term Interest-Free Credit
(STIFC): Often used for high-value
items, either provided by a
merchant or third-party lender.

3. Key Changes
Narrowing of 60F Exemption: BNPL
providers will no longer benefit from the
exemption.
Financial Promotions Regime:
Merchants must comply with
regulations when promoting BNPL
services.
Creditworthiness Assessments: BNPL
providers will now be subject to FCA’s
creditworthiness requirements.

4. What Remains
the Same
Merchant-Provided Credit: Still
allowed under 60F exemption if
conditions are met.
Credit Broking: Merchants
introducing customers to BNPL
lenders remain exempt from
regulation.

5. Next Steps for BNPL Providers
FCA Authorisation: BNPL providers must register with the FCA
under the Temporary Permissions Regime (TPR) to continue
operations once regulations take effect.
Consequences of Non-Compliance: Firms failing to register
will need to halt operations and undergo the full FCA
authorisation process.

6. CONTACT US
[email protected]
03301330811

Suite 1810, Unit 3a,34-35 Hatton Gardens, Holborn, EC1N 8DX
https://www.memaconsultants.com

7. THANK YOU
[email protected]