This Policy Statement (PS) summarises the feedback we received, and sets out our response to it.
We are going ahead with our proposals, with some technical amendments to the definition of buy now pay later (BNPL) credit. We are also extending the implementation period for the backdating interest remedy, so that firms have enough time to implement this significant change.
What we are changing
The proposals confirmed in PS19/17 mean:
- Firms cannot charge backdated interest on amounts of money that have been repaid by the consumer during the BNPL offer period.
- Firms have to provide better information to consumers about BNPL offers. The information should be more balanced and appropriately reflect the risks as well as the benefits of the product.
- Firms must give prompts to consumers, to remind them when the offer period is about to end, so that consumers are more likely to repay the credit before they incur interest.
Who this applies to
This document should be read by:
- firms involved in offering BNPL deals, including retailers and lenders
- consumer groups
- consumers who use BNPL deals, or might consider using them in future
The combination of the product being simpler (because interest charging will be simpler) and clearer information for consumers should help consumers make more informed decisions and use the product better. We want to see more consumers repaying in full during the BNPL offer period, and others repaying more of their debt during the BNPL offer period. This means they will incur less interest, and repay their debt more quickly.
We want firms to provide better consumer information about BNPL offers. The information should be more balanced and reflect the risks as well as the benefits of the product. We want consumers to be clearer about the implications of not repaying the full balance by the end of the offer period.
We want firms to give prompts to consumers, to remind them the offer period is about to end. This should make it more likely that consumers repay the credit before they incur interest.
We want consumers to get full credit for partial repayments they make during the BNPL offer period, rather than being charged interest on these sums if they do not repay the full balance by the end of the offer period.
If your firm is affected you need to comply with:
- the disclosure rules and guidance by 12 September 2019
- the rule preventing backdated interest from being charged on repaid amounts by 12 November 2019