The FCA has warned companies that offer buy now pay later (BNPL) products that their BNPL financial promotions must comply with financial promotion rules.
The FCA said unauthorised companies may be committing a criminal offence if they don’t have an FCA-authorised firm approve their financial promotions.
The authority noted that authorised firms selling unregulated or exempt BNPL products must comply with the relevant rules unless an exemption applies. This includes that their BNPL promotions must be clear, fair and not misleading.
The FCA added that it was concerned consumers could be misled if BNPL financial promotions do not comply and has seen financial adverts on websites and social media, including posts by social media influencers, which may breach FCA rules.
For example, adverts that emphasise the benefits of BNPL products without fair and prominent warnings of any risks to customers, such as the risk of taking on debt that customers cannot afford to repay, the consequences of missed payments and any other adverse consequences such as the impact on the customer’s credit file information about when charges become payable.
FCA executive director of consumers and competition Sheldon Mills said, “As we face a cost-of-living crisis, consumers are having to make difficult decisions about their finances and how they pay for goods and services.
“Firms need to ensure consumers, particularly those in vulnerable circumstances, are equipped with the right information at the right time, so they can make effective, timely and properly informed decisions. It is vital that adverts are clear, fair and not misleading.”
The number of buy now, pay later (BNPL) users will surpass 900 million by 2027, rising from 360 million in 2022.
This finding comes from Juniper Research’s new report ‘Buy Now Pay Later: Regulatory Frameworks, Competitor Leaderboard & Market Forecasts 2022-2027.’
It stated that 157% growth will be driven by the anticipated economic downturn, which will increase the demand for low-cost credit solutions.
Copyright © 2022 RegTech Analyst
Copyright © 2018 RegTech Analyst
