On February 2, HM Treasury (HMT) announced that interest free buy-now-pay-later (BNPL) products will be regulated by the Financial Conduct Authority (FCA).

The announcement came following a recommendation from Christopher Woolard, the former FCA interim CEO, in light of his review of the unsecured credit market (the Woolard Review).

The Woolard Review identifies potential harms to consumers caused by BNPL products, which include the following:

  • viewing BNPL products as a payment technology rather than credit;
  • believing BNPL products are already regulated; and
  • finding it difficult to make an informed decision as a result of the method BNPL products are promoted.

The FCA supports the Woolard Review and believes it will benefit consumers and the wider credit market.

The recommendation will be brought forward to Parliament to discuss with legislation to follow.