Luke Kosky’s Post

BNPL …. Regulation is here …. nearly It’s been a long time coming, the FCA have been chomping at the bit but at last the government is consulting on Buy Now Pay Later regulation. The consultation period is relatively short and the FCA have already completed work in this space. From the FCA perspective they are intending (as they did when they took over consumer credit) to utilise a temporary permissions regime while firms apply for full permission. I’ve worked on several of those applications, let’s just say it is definitely not a tick box exercise. Interestingly Klarna announced yesterday it is selling most of its UK loan book to a specialist US PE firm, generating £30 billion of additional capital. Interesting times. Existing credit providers, currrenty under FCA supervision, will be hoping that this move levels the playing field. So we can expect credit worthiness, affordability and fair treatment during hardship to be part of the package. Who could forget Consuner Duty, the FCAs flagship outcomes based regulation? Finally complaints and the FOS will create a new and potentially formidable challenge (not to mention additional cost). If anyone would like a confidential discussion about what this means, practically, commercially and proportionately then please reach out. https://lnkd.in/ex26MGbd

Treasury's draft 'Buy Now, Pay Later' (BNPL) legislative package introduces proposed amendments to the National Consumer Credit Protection Act 2009 and the National Credit Code. The package aims to regulate BNPL arrangements as low-cost credit contracts (LCCC), imposing fee restrictions and licensing requirements on BNPL providers. It aligns with Treasury's proposed regulatory options and seeks to balance consumer access with enhanced protections. We unpack everything you need to know. #fintech #bnpl #consumercredit Hall & Wilcox FinTech Australia Australian FinTech Max Ding Wilson Lee

Much awaited #BNPL regulation, coming from Australia this time, one of the countries with the highest adoption of BNPL. #Customerproctection should be at the heart of any ruling, while granting the business case for service providers is also a must. #Digitalpayments #payments #Newmeansofpayment #Alternativepaymentmeans

Here's the latest on BNPL 👇

What's happening in payments compliance: BNPL Firms Enthusiastic As UK Government Unveils Legislation 👉 Buy now, pay later (BNPL) firms and other stakeholders have applauded the UK’s new Labour government for introducing regulation that will bring firms into the scope of supervision from the Financial Conduct Authority (FCA) 👉 The new legislation brings an end to a string of consultations and commitments that extend back to 2021 👉 Stakeholders have until November 29 to respond to the government’s consultation on the new regulatory proposals 📖 Read the full article: https://lnkd.in/e8jywJUT #paymentsnews #paymentscompliance #bnpl

EU Second Consumer Credit Directive: Scope and impact for buy-now pay-later (BNPL) providers

Commenting on HM Treasury proposals for regulation of Buy-Now Pay-Later (BNPL), our CEO Janine Hirt said: “BNPL is helping many people manage their money, using a form of credit whichTreasury itself has described as “inherently lower risk” than traditional interest bearing credit. These products help consumers better manage their finances, allowing them to spread the cost of a purchase without paying any interest. “Consumers and BNPL providers want and need regulation that protects shoppers and supports continued innovation. Innovate Finance and BNPL firms have been making the case for regulation that provides better outcomes for consumers and avoids the pitfalls that consumer groups have identified with the tick box approach of the 50 year old Consumer Credit Act. “We have been developing and testing regulatory models, which we have shared with the Minister and her officials. This is a complex area of regulatory rules so we need to study the proposals in detail, but we are encouraged that our work has provided the basis for the proposed new regime. We look forward to working with Government and the FCA to introduce a fit for purpose and future-proof regulatory approach.” 🔗 You can read the proposals here https://lnkd.in/dXwmG2DM #BNPL #FinTech #VoiceOfFinTech #FinTechPolicy Adam Jackson Christopher Foo Megan Jenkins Andy Thornley

The regulatory space for BNPL is in a state of flux, with lively debate as to the best way forward. We think that regulation has an important role to play in the growth of the BNPL industry, and our latest blog explores what BNPL-specific regulation might look like. We think it should follow these guiding principles: 🔎 Distinguish the BNPL-specific metrics that best predict consumer credit risk from metrics showing responsible repeat usage (the latter should be reflected in an increased credit score). 💡 Recognise the distinction between BNPL as a non-revolving form of credit which presents lesser risks than revolving credit and is understood differently by the consumer. Disclosure-related requirements should reflect this important distinction.   🏹 Allow innovative technologies to develop without overbearing red tape and ill-fitting compliance requirements which stifles progress in the lending industry. Read more here 🔗

I spend a lot of time thinking about how BNPL will / should / could / might be regulated in different jurisdictions around the world. It’s a complicated area which demands attention to the details. However, in my view, starting from the right foundations is just as important when designing a regulatory strategy. Our latest blog post sets out some guiding principles.

As a regulator I worked on the Retail Distribution Review, when the UK regulator set ruels around commissions. As the UK's Financial Attaché in the EU I was at the sharp end of work on the post credit crunch financial crisis regulatory clear up in 2009. Media focus on the potential for credit crunch, and the FCA's prioritisation of finance firms by extending the pause on claims against motor finance companies for miselling and secret commissions, I think are questionable. On availability of credit and financing, the vast majority of motor finance is provided by very few of the largest firms. Other lenders not operating this business model will almost certainly step in. of course current lenders may also change their practices. Businesses with good lending practices should be very profitable in coming years. Consumer protection is best served by ensuring retail consumers have a legal route to compensation. Market integrity is best served by ensuring consumers can have confidence in the system.