4 UK BNPL Providers Change Course On Terms After FCA Probe

The buy now, pay later market is an exciting addition to the finance sector. However, the companies providing access to BNPL may not always play by the rules. Clearpay, Klarna, Openpay, and Laybuy face an inquiry by the FCA into their terms and practices on this front. 

BNPL Isn’t Always What You Think

Every financial service provider offering buy now, pay later services must inform users of the terms and conditions that apply. Per the FCA, several UK BNPL providers may have acted unfairly on that front, primarily due to unclear terms. There are concerns over the potential risk of harm to Clearpay, Openpay, Laybuy, and Klarna users. While nothing has been confirmed yet, these concerns warrant a further investigation.

Interestingly, the buy now, pay later agreements are not subject to regulation in the UK. That doesn’t mean service providers can do whatever they want on this front, though. The FCA determines the transparency and fairness of company terms through the Consumer Rights Act. Ideally, it would make terms on contract cancellations and continuous payment authorities easier to understand.

However, when it comes to late payment fees, Clearpay, Laybuy, and Openpay claim they will voluntarily refund late payment fees charged under specific circumstances. Refunds are to be paid automatically, but that has seemingly not happened every time. Therefore, affected users are advised to contract the four providers and demand a refund. 

The FCA’s Sheldon Mills adds:

“We do not yet have powers to regulate these firms, but we do have powers to review the terms and conditions of consumer contracts for fairness, and have acted proactively to ensure that the BNPL industry adopts high standards in their terms and conditions. The four BNPL firms we have worked with have all voluntarily agreed to change their approach. We welcome this and hope that the rest of the industry will now follow.”

It is good to see voluntary action by the four BNPL firms on this matter. However, it makes one wonder when buy now, pay later firms will be regulated in the UK. It appears that may prove necessary sooner rather than later.