The UK’s chief financial regulator has doubled down on his campaign for buy now pay later (BNPL) regulation to protect consumers.
Speaking at Imperial College London Business School, Financial Conduct Authority CEO Nikhil Rathi restated that while BNPL offers some benefits to consumers it “poses a risk and needs regulation”.
Rathi said that when it comes to regulating technology, “sometimes we think too much about what we stand to lose rather than what we stand to gain”.
FCA reiterates call for BNPL regulation
The FCA boss has been calling for BNPL, which splits the cost of purchases into instalments, to come under strict regulation since he took the role.
The government previously indicated that the payment type would face similar scrutiny to other loan types when it published an outline for a new regulatory framework in February 2023.
Under the regulation proposal, credit checks would be required before granting users BNPL services, and use of those services would be reported to credit agencies.
BNPL companies include Sweden’s Klarna and London-headquartered Zilch, both of which have implemented regulatory policies in line with government proposals.
The future of the new regulatory framework was put into question when it was reported that the Treasury was considering scrapping the policy over fears of a market backlash.
Rathi was quick to dismiss claims that the industry would abandon the UK market due to regulation.
“You will have firms saying to you ‘this will undermine the competitiveness of the UK market, it will undermine the fintech industry’ – actually a large number of fintechs including Innovate Finance, the industry body, have supported regulation,” Rathi said in July.
“We will make sure that there is proportionate regulation that supports innovation, but also encourages responsible lending.”
UKTN has contacted the FCA and Treasury for comment.