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15 February 2022

The Financial Conduct Authority (“FCA”) have secured changes to Buy-Now-Pay-Later (“BNPL”) contracts to tackle potentially unfair and unclear contract terms.

BNPL agreements are not yet regulated by the FCA however the Regulator said it wanted to protect consumers at a time when demand for these services is soaring. The FCA was able to use the Consumer Rights Act to assess the fairness and transparency of the terms. As a result, the FCA  worked with BNPL firms to make changes to contract terms terms on issues including contract cancellations and continuous payment authorities. In addition, one of the terms that involved late payment fees has resulted in Clearpay Laybuy, and Openpay agreeing to voluntarily refund customers who have been charged late payment fees in specific circumstances.

Sheldon Mills, executive director of consumers and competition at the Financial Conduct Authority (FCA), said: “Buy now pay later has grown exponentially.

“We do not yet have powers to regulate these firms, but we do have powers to review the terms and conditions of consumer contracts for fairness, and have acted proactively to ensure that the BNPL industry adopts high standards in their terms and conditions.”

If you would like to read more about the proposed regulation of BNPL firms you can read our analysis of the BNPL consultation undertaken by HM Treasury in 2021 here.

By Ian Beardmore

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