On 12 June 2019, the FCA published Policy Statement 19/17: Buy now pay later offers – feedback on CP18/43 and final rules (PS19/17).
Buy now pay later (BNPL) offers are credit offers with a product feature that gives the consumer a promotional period, typically up to 12 months, during which they are not generally required to make repayments.
In December 2018, the FCA issued a consultation paper (CP18/43) on high-cost credit which included proposed rules and guidance relating to catalogue credit and store cards, including some proposals in relation to BNPL offers (our blog is here). The proposals relating to BNPL offers included:
- three proposed disclosure remedies, designed to improve the information consumers receive about these offers; and
- a proposal to prevent firms charging backdated interest on money that the consumer has repaid during the BNPL offer period.
The key features of the FCA’s proposals meant that:
- firms cannot charge backdated interest on amounts of money that have been repaid by the consumer during the BNPL offer period;
- firms have to provide better information to consumers about BNPL offers. The information should be more balanced and appropriately reflect the risks as well as the benefits of the product; and
- firms must give prompts to consumers, to remind them when the offer period is about to end, so that consumers are more likely to repay the credit before they incur interest.
In light of positive feedback received, the FCA will continue as planned and implement the measures as proposed. Affected firms must comply with the disclosure rules and guidance by 12 September 2019, and the rule preventing backdated interest from being charged on repaid amounts by 12 November 2019. The final rules are provided in Appendix 1 of PS19/17.