Trend for regulator to increase scrutiny and regulation of more firms and the advantages of digitising compliance
The announcement that Buy-Now Pay-Later Credit firms will need to be authorised by the FCA as a result of the government’s measures to reduce potential harm experienced by some consumers, may present challenges for some in the industry. In 2022, the regulator has pushed their reform agenda across a variety of areas that will impact many firms. These areas include, but are not limited to: Consumer Duty rules, Operational Resilience, Financial Promotions, and increased scrutiny on Financial Crime Controls.
In this latest announcement, the government is strengthening the regulation of interest-free Buy-Now Pay-Later agreements, in order to protect the millions of Britons currently utilising this service to manage their finances by spreading costs.
Buy-Now Pay-Later credit agreements can be a helpful way to manage finances, allowing people to spread the full cost of a purchase over time. However, people do not currently have the usual full range of borrower protections when taking out this type of loan and they are rapidly increasing in popularity, resulting in a potential risk of harm to consumers.
The government’s Buy-Now Pay-Later plans
- Lenders offering the product will need to be approved by the Financial Conduct Authority (FCA), and borrowers will also be able to take a complaint to the Financial Ombudsman Service.
- It will be compulsory for lenders to make sure that the loans are affordable, and the advertisements are reasonable and not misleading.
- The rules will be further expanded so that they cover additional forms of unsecured short-term credit with similar consumer risk, with dentistry work given as an example.
- The government also confirmed that other forms of short-term, interest-free credit, such as those used to pay for dental work or larger items like furniture, will be required to comply with the same rules.
While many Buy-Now Pay-Later credit firms will be well-placed to ensure they comply with the new rules and are able to demonstrate ongoing compliance in the future, others may not be in a similar position.
This is where ComplyPortal can help. ComplyPortal is a Web-based compliance management software designed by compliance specialists for use by compliance professionals. We make compliance simpler by providing you with ready to use monitoring templates that help you manage critical compliance monitoring tasks, registers, approval processes and attestations in your firm. We regularly update templates to stay on top of industry developments and new and existing regulations.
Luis Parra, Managing Director – ComplyPortal, said: “Firms can expect the trend for more regulatory controls and increased compliance obligations. The FCA clearly has an expectation that firms will take a robust approach to ensuring they are meeting clients’ needs across the board. Our services will ensure firms are in a good position to document and track how you are meeting the new regulatory requirements.”