Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the implications for his policies of different practices relating to the (a) provision of forbearance and (b) prioritisation of payments on essential bills in the (i) regulated and (ii) buy-now-pay-later sector.

The Financial Conduct Authority’s (FCA) rules require firms offering regulated credit products to offer forbearance to customers who are in arrears with their repayments. Firms can meet these requirements by suspending, reducing, waiving, or cancelling any further interest or charges on credit agreements and allowing customers to defer payment of arrears or make token payments for a reasonable period of time.

The FCA is also in the process of strengthening its framework for firms to provide better support to customers facing payment difficulties. It recently consulted on plans to incorporate its Tailored Support Guidance into its Handbook. This guidance sets out the FCA’s expectations of firms when supporting borrowers in financial difficulty, including providing tailored forbearance.

While Buy-Now, Pay-Later (BNPL) agreements are unregulated, when a BNPL firm passes a debt to a debt collection agency, the debt collection agency must be authorised and regulated by the FCA. It must also comply with the FCA’s rules, including those on the treatment of customers in financial difficulty outlined above.