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Innovate Finance slams UK government's 'onerous' BNPL proposals

Innovate Finance slams UK government's 'onerous' BNPL proposals

Fintech industry body Innovate Finance says its members are "deeply concerned" by the UK government's plans to regulate the buy now, pay later sector, arguing that the measures would be more onerous than those that apply to credit cards.

In February, the government finally launched its long-anticipated consultation on rules to crack down on the unregulated BNPL sector.

In its response, Innovate Finance says that "all our members are deeply concerned and consider the latest policy proposals and draft statutory instrument to be a material departure from the heavily trailed, ‘tailored and proportionate’ regime for BNPL".

Continues the body: "Our members consider that the measures, in aggregate, are more onerous than those that currently apply to regulated consumer credit products with a greater risk of harm such as credit cards."

Specifically, Innovate Finance say that pre- and post-contractual disclosures are unsuited and disproportionate to the nature of the product and "drive poor consumer outcomes".

These disclosures will lead to friction and "drive consumers away" from BNPL to more expensive alternatives such as credit cards, says Innovate Finance "at such a rate that it casts doubts over the viability of firms’ UK operations".

In addition, the response argues that the government plans do not capture Big Tech and large retailers, which could lead to an anti-competitive credit market.

Innovate Finance also complains that compliance with the rules will be costly, claiming that "there is a range of impact from no less than £1.25 million to £100 million; this is a conservative estimate based on data points shared by our members."

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 04 May, 2023, 12:41Be the first to give this comment the thumbs up 0 likes

FWIW I stand with Innovate Finance. 

BNPL has done a great job of democratizing credit, that too mostly free credit. It's lame to regulate it on the presumption - even if true - that it preys on the vulnerable.   

Regulators need to understand that a for-profit private sector company can either democratize or protect the vulnerable, but not both. 

If they really want to do both, they should try out the Indian playbook of setting up not-for-profit operators e.g. NPCI for Digital Payments, ONDC for Ecommerce.

NPCI has democratized digital payments with UPI. Due to Reg ZeroMDR, merchants do not incur any cost for accepting digital payments. The only people who are stiffed are greedy banks.

ONDC is trying to do the same thing in ecommerce by providing a zero commission network between buyers and sellers, thereby democratizing digital commerce for both buyers and sellers, and stiffing only the fatcat Swiggys and Zomatos.