Featured Product

    HMT to Reform Consumer Credit Act and Regulate Buy-Now Pay-Later

    June 20, 2022

    Her Majesty’s Treasury (HMT) published responses to the consultation on its regulation for Buy-Now Pay-Later. Additionally, HMT announced that the UK government has committed to reform the Consumer Credit Act, which regulates all credit card purchases and personal loans.

    The responses to the consultation document set out how the government intends to regulate Buy-Now Pay-Later products. In particular, the government intends to:

    • Amend the scope of regulation to capture Buy-Now Pay-Later and other currently-exempt agreements (which are referred to as short-term interest-free credit) when they are provided by third-party lenders
    • Extend this scope to also capture short-term interest-free credit provided directly by merchants where it is offered online or at a distance, but further stakeholder engagement is necessary to fully understand the scale of the merchant-offered short-term interest-free credit market
    • Allow exemptions for specific agreements where there is limited risk of potential consumer detriment and where regulation would otherwise adversely impact day-to-day business activities

    The government’s approach to regulatory controls for agreements that will be brought into regulation will tailor the application of the Consumer Credit Act 1974 to these products and the elements of lending practice most linked to potential consumer detriment. Following the publication of this response, the government will engage with stakeholders to enable a final decision on whether the scope of regulation should be extended to include short-term, interest-free credit provided directly by merchants online or at a distance. Given the complexity of this regulation, the government intends to publish and consult on draft legislation at the end of the year. Following this, the government aims to lay secondary legislation by mid-2023, after which the Financial Conduct Authority (FCA) will consult on its rules for the sector.

    The government also plans to modernize consumer credit laws to cut costs for businesses and simplify rules for consumers. The government will move much of the Act from statute to sit under the Financial Conduct Authority, or FCA, enabling the regulator to quickly respond to emerging developments in the consumer credit market, rather than having to amend the existing legislation. It will also simplify ambiguous technical terms to clarify to consumers what protections they have and make it easier and more cost effective for businesses to comply with regulation. A consultation that is expected to be published by the end of this year will outline the government’s proposals and seek views from stakeholders on how the Act should be reformed.

     

    Related Links

     

     

    Keywords: Europe, United Kingdom, Banking, Reporting, Basel, Credit Risk, Lending, Consumer Credit, Buy Now Pay Later, FCA, HMT

    Featured Experts
    Related Articles
    News

    APRA Publishes Results of Climate Risk Self-Assessment Survey

    The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.

    August 04, 2022 WebPage Regulatory News
    News

    ACPR Publishes Updates Related to CRD IV and Covered Bonds

    The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).

    August 03, 2022 WebPage Regulatory News
    News

    BIS Paper Contributes to Debate on Regulating NBFIs and Big Techs

    The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.

    August 03, 2022 WebPage Regulatory News
    News

    EIOPA Publishes Guidance on Climate Change Scenarios in ORSA

    The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).

    August 02, 2022 WebPage Regulatory News
    News

    EBA and ECB Respond to Proposals on Sustainability Disclosures

    The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.

    August 01, 2022 WebPage Regulatory News
    News

    BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks

    A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.

    July 29, 2022 WebPage Regulatory News
    News

    EBA Publishes Multiple Regulatory Updates for Regulated Entities

    The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.

    July 29, 2022 WebPage Regulatory News
    News

    EIOPA Issues SII Taxonomy and Guide on Sustainability Preferences

    The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.

    July 29, 2022 WebPage Regulatory News
    News

    EESC Opines on Proposals on CRR and European Single Access Point

    The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).

    July 29, 2022 WebPage Regulatory News
    News

    HM Treasury Publishes Multiple Regulatory Updates in July 2022

    HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.

    July 29, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8423