Credit

(asked on 24th January 2022) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate his Department has made of amount collected in late payment fees by the buy now, pay later sector in each of the last three years.


Answered by
John Glen Portrait
John Glen
Paymaster General and Minister for the Cabinet Office
This question was answered on 31st January 2022

HM Treasury regularly monitors changes in the consumer credit market as part of the normal process of policy development.

The Woolard Review into the unsecured credit market found several potential risks of consumer detriment from interest-free Buy-Now Pay-Later products, including the absence of information given to consumers about features of Buy-Now Pay-Later agreements. The Government recognises those risks, but also notes that as an interest-free product, Buy-Now Pay-Later can often be lower-risk than other forms of borrowing and a useful tool to help consumers manage their finances. That is why, on 2 February 2021, the Government announced its intention to regulate Buy-Now Pay-Later products in a proportionate manner.

The Government published a consultation on policy proposals for the regulation of Buy-Now Pay-Later on 21 October 2021, which closed on 6 January. The consultation included proposals to apply Financial Conduct Authority (FCA) rules on pre-contract disclosure and adequate explanations to Buy-Now Pay-Later agreements. These rules require firms to make adequate pre-contractual explanation to ensure the customer is in a position to assess whether the agreement is suitable for their needs and financial situation.

The Government is now reviewing responses to this consultation and considering next steps and intends to publish a consultation response in the spring.

HMT does not hold information regarding the number of 18- to 24-year-olds who have been referred to debt collection agencies by Buy-Now Pay-Later in the last 12 months, or the amount collected in late payment fees by the Buy-Now Pay-Later sector in each of the last three years. Instead, HMT draws on the research of various stakeholders including consumer groups and the wider financial services industry.

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