Britain cracks down on 'buy now pay later' firms (updated)

Openpay

14/02/2022 09:49

(Adds more detail)
    LONDON, Feb 14 (Reuters) - Britain's financial watchdog said
on Monday it had told four 'buy now pay later' firms (BNPL) to
change their contracts after identifying "potential harms" to
consumers.
    A form of unsecured credit, BNPL products typically offer on
the spot interest-free short-term loans that spread payments for
retail goods like clothing.
    The market more than trebled in size during 2020, when
COVID-19 lockdowns saw more people struggling to make ends meet.
    "The four firms involved, Clearpay, Klarna, Laybuy and
Openpay, have fully cooperated with our work. We welcome their
cooperation and their actions to address our concerns," the
Financial Conduct Authority said in a statement.
    The changes make the contracts fairer, easier for consumers
to understand and better reflect how they use them in practice,
the FCA said.
    Klarna said it had already implemented the FCA's proposed
changes.
    "We have never received a customer complaint specifically
related to our terms and conditions but are always open to ways
in which they can be improved," said Alex Marsh, Head of Klarna
UK.
    The watchdog said that all firms in the sector should comply
with all requirements of consumer protection laws that apply to
their business.
    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 such fees in specific
circumstances, the FCA said
   Clearpay, Laybuy and Openpay did not immediately respond to
requests for comment.
    A review by former FCA acting CEO Christopher Woolard in
February 2021 said BNPL can pose potential consumer harms https://www.fca.org.uk/publication/corporate/woolard-review-report.pdf
 that need to be addressed as soon as possible.
    Britain's finance ministry promised to bring forward
legislation to regulate BNPL when parliamentary time allowed.
    

 (Reporting by Huw Jones
Editing by Tommy Wilkes, Kirsten Donovan)
 ((huw.jones@thomsonreuters.com; +44 207 542 3326; Reuters
Messaging: huw.jones.thomsonreuters.com@reuters.net))