UK Government launches consultation on bringing BNPL into FCA regulation

The UK Government launched a six-week consultation in October 2023 on draft legislation designed to bring buy now pay later (BNPL) into the Financial Conduct Authority's regulatory perimeter, according to a briefing by the Consumer Council for Northern Ireland to the Northern Ireland Assembly Committee for Finance¹. The consultation ran for six weeks from that point¹.

The briefing, dated 6 November 2024, records the consultation as part of a wider account of the banking and financial services landscape in Northern Ireland¹. It does not set out the contents of the draft legislation, the closing date of the consultation, or the Government's response to it. Those details have not been reported in the document.

The same briefing sets out the regulatory backdrop against which BNPL sits. It states that the Consumer Duty from the Financial Conduct Authority was operationalised from July 2023, with a final implementation milestone on 31 July 2024, setting the regulatory standards for firms to deliver the best outcomes for their customers¹. It also records that the Consumer Council has co-signed a letter to Rachel Reeves MP, Chancellor of the Exchequer, asking for financial inclusion to be one of the FCA's economic policy priorities, to balance the growth and competitiveness objective¹.

The briefing also notes that a UK national financial inclusion strategy is upcoming, and describes it as an opportunity for Northern Ireland to develop a tailored action plan reflecting the unique considerations of its market and population¹. It adds that the Consumer Council has written to Tulip Siddiq MP, Economic Secretary to the Treasury and City Minister, offering to help advance the UK Government's financial inclusion priorities through participation on the appropriate structures dedicated to implementing that strategy¹.

Why it matters for households

BNPL sits outside the FCA's regulatory perimeter at the point the consultation was launched, so the draft legislation described in the briefing is the mechanism by which that would change¹. The briefing does not state which BNPL products would be covered, what protections would apply, or when any new rules would take effect, so the practical effect on borrowers is not yet set out in the document.

The wider context in the briefing is a Northern Ireland market with a shrinking branch network and a population the Consumer Council describes as more vulnerable than parts of the UK. It reports that Northern Ireland will lose around 40% of its bank branch network between 2020 and early 2025¹, and that 22% of households there are on less than £15,000 a year, against 17% across the UK¹. It also records the highest rate of economic inactivity in the UK, at 28.5% against 21.8%¹, and lower financial resilience and capability, with more households likely to use cash¹.

Digital access shapes how far consumers can use online credit and banking services. The briefing reports that almost one in five people in Northern Ireland (18%, or 276,000 people) had no digital skills, and that almost half (47%) of those aged 65 and over had no digital skills, compared with less than 10% of those aged 16 to 49¹. Over half (55%) of respondents with no qualifications reported having no digital skills, against 5.9% of those with at least degree level qualifications¹.

What happens next

The briefing does not give a date for publication of the Government's response to the consultation, or for any subsequent legislation on BNPL¹. It records that the Consumer Duty reached its final implementation milestone on 31 July 2024¹, and that the Consumer Council has written to the Economic Secretary to the Treasury offering to take part in structures implementing the national financial inclusion strategy¹. No timetable for that strategy is given in the document.