Draft Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025

Mark Garnier Excerpts

Wednesday 25th June 2025 General Committees

[Mark Garnier (Wyre Forest) (Con)]

It is an absolute joy to serve under your very professional and diligent leadership and chairmanship of this Committee, Mr Stuart. I also congratulate the Minister on his debut in a Delegated Legislation Committee. He does it masterfully.

These buy now, pay later measures, as colleagues will recall and as pointed out by the Minister, were consulted on extensively by the previous Government. As the Minister also pointed out, there was an unfortunate general election, which got in the way of us actually—

[Torsten Bell]

Fortunate.

[Mark Garnier]

That rather depends on one’s point of view. I think it was fortunate for everyone in this room apart from Conservative Members.

Moving on, we are absolutely supportive of bringing these products within the scope of financial regulation. As we have heard, the sector has seen rapid growth. Because the products are now used by millions of people, the last Government rightly acted to protect consumers from harm—or wanted to act. The proposed regulations require FCA authorisation, affordability checks and clearer information for consumers, which are all measures that we absolutely support. An ability to access the Financial Ombudsman Service will also give consumers an avenue to escalate any issues.

However, as these regulations have been developed, several concerns have been raised by businesses operating in the BNPL market, and I hope that the Minister may be able to address those issues today. First, the exemption for merchants offering their own BNPL products could create inconsistencies and consumer risks. I appreciate the sentiment for keeping an exemption, and Conservative Members do not want to expose small businesses to burdensome regulation. For example, the local gym should not be required to undertake the FCA approval process to provide a 12-month membership; I am sure that many people would agree with that. However, a potential loophole still exists. A large e-commerce website, such as Amazon, could offer BNPL directly and not come under these regulations. That is because there is no way in the Consumer Credit Act to distinguish between a large e-commerce site and a small or medium-sized enterprise. Currently, no online retailer is operating its own version of BNPL, as opposed to using a third party provider. However, I am sure that the industry would welcome reassurance from the Minister today that the Government will be looking at any knock-on effects that these regulations might cause.

Opposition Members also welcome the Treasury’s saying that work is under way to review and reform the Consumer Credit Act, but I hope that the Minister will confirm that the review will specifically address the issue of definitions, ensuring that there is a way to distinguish between the largest retailers and small businesses. Will the Government also provide further details on how they will go about monitoring the prevalence of retailer-provided BNPL services, and at what point they will intervene once they see evidence of such activity taking place?

Secondly, short-term lenders have highlighted the fact that although interest-free agreements under 12 months will fall under a new regime, longer or interest-bearing agreements remain subject to older rules. A 10-month interest-free instalment agreement and a 14-month low-interest agreement may be economically and structurally similar, but one will benefit from modern disclosure rules while the other will not. I hope that the Minister can address whether that has the potential also to be reviewed as part of the review of the CCA.

Finally, the regulations do not address late fees, which can disproportionately impact vulnerable consumers, so again I would welcome the Minister’s setting out today whether the Government will also keep that under constant review.

The Opposition support the intent of these regulations, but call for the Government to address some of the outstanding points raised by the industry in order to ensure robust consumer protection and a level playing field for everybody participating in this market.