Tulip Siddiq has been confirmed as the new economic secretary to the Treasury, signalling that the Labour government may be moving towards stricter fintech regulation.
In her role as shadow City minister, Siddiq repeatedly called for tighter regulation on financial services, most notably buy now pay later (BNPL).
BNPL is an app-based loan product with which consumers can spread the cost of a purchase across several instalments.
The MP for Hampstead and Highgate last year criticised the inaction of her Conservative counterpart, the then economic secretary Andrew Griffith, in implementing consumer protections for the product.
Siddiq said while “many people value BNPL products” as a “useful way to budget”, the “failure to properly regulate the sector has left millions at risk from some of the bad actors in the market”.
In its Financing Growth Report in February, Labour confirmed its intention to regulate BNPL, stating the “government has kicked reform into the long grass, leaving millions of consumers unprotected and the BNPL sector in a state of uncertainty”.
The previous government published draft legislation last year that would grant the Financial Conduct Authority (FCA) additional powers to regulate the sector.
However, the matter was taken no further, with rumours from Treasury sources suggesting the plan may be scrapped over fears it would cause an exodus of fintech firms.
FCA chief executive Nikhil Rathi was quick to dismiss concerns that BNPL providers would ditch the UK if stricter rules were put in place.
The proposed new regulation would require BNPL firms to conduct strict credit checks to ensure customers can afford the product.
“We welcome Tulip Siddiq as the new City and fintech minister for the Labour Party,” a spokesperson at BNPL firm Clearpay told UKTN. “In recent months, Siddiq has made clear her desire to deliver urgent buy now, pay later regulation that protects consumers, and supports choice and innovation in the credit market.
“We will continue to support the new government and regulators as they deliver a regulatory landscape that provides good consumer outcomes, supports fintech growth and keeps pace with innovation.”