Money: British watchdog toughens up 'buy now, pay later' credit rules - - PressFrom - United Kingdom
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MoneyBritish watchdog toughens up 'buy now, pay later' credit rules

12:35  12 june  2019
12:35  12 june  2019 Source:   reuters.com

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Buy Now Pay Later is an interest bearing option that allows you to delay payments on your purchases for up to 12 months depending on how much you spend. The delayed payment period starts from the date of order (including pre-ordered items and those not ready for immediate dispatch).

Several tech companies, including Affirm, Afterpay, and Klarna, are offering point-of-sale loans (or instant installment plans) as an alternative to credit

British watchdog toughens up 'buy now, pay later' credit rules © Getty

Britain's Financial Conduct Authority said on Wednesday it will ban firms from charging interest on "buy now pay later" (BNPL) credit to save consumers up to 60 million pounds a year.

The FCA said the rules will cover a range of companies who offer BNPL credit, including catalogues, store cards and retailers who offer finance at the point of sale.

BNPL usually includes a one-year offer period, during which customers do not have to make payments and are not charged interest. If the consumer does not repay the entire amount within this period, interest is charged from the date of purchase.

Consumers who repay part but not all of the amount owed are charged backdated interest on that portion, with typically more than a third of consumers not repaying within the offer period.

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The FCA said that from November firms will be banned from charging backdated interest on money that a customer has already repaid during the offer period.

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British watchdog toughens up 'buy now, pay later' credit rules

It is the latest intervention by the FCA to tackle high cost credit that affects vulnerable consumers in particular. It has already taken steps in the payday loan, rent-to-own and overdraft markets.

"We expect the overall package of measures will save consumers around 40-60 million pounds a year and tackle the harm we identified in this market," Christopher Woolard, the FCA's executive director of strategy and competition, said in a statement."

"As we have shown, we will intervene where we see harms and we remain vigilant in this and other sectors."

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Sign Up to Their Credit Facility. Buy Now , Pay Later . Once you are registered with a catalogue credit account you are ready to make your purchases within your given credit limit. Everything from TV’s, furniture and buy now , pay later washing machines. Means it has never been easier to spread

Firms will also have to provide better information to consumers about BNPL offers, and give "prompts" to remind consumers when an offer period is about to end.

Credit checker ClearScore said the changes will help consumers make better choices as BNPL schemes can appear very attractive but carry eye-watering interest rates, fees and charges.

"They are instantly available at store counters, which means people don't often have time to consider their options or look at the terms and conditions before taking them out," ClearScore said.

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'Does anyone at the FCA read the newspapers?' MPs slam City watchdog for failing to probe Woodford - as FCA chief admits the fund that locked in investors had bent the rules.
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