The Financial Conduct Authority (FCA) has secured changes to potentially unfair and unclear terms in the contracts of Clearpay, Klarna, Laybuy and Openpay which will now make terms on issues like contract cancellations and continuous payment authorities fairer and easier to understand. One of the terms that involved late payment fees has resulted in Clearpay Laybuy, and Openpay agreeing to voluntarily refund customers who have been charged late payment fees in specific circumstances.
The FCA was concerned there was a potential risk of harm to consumers as a result of the way some of the firm’s terms were drafted, so action has been taken.
The recent Woolard Review into change and innovation in the unsecured credit market found the use of Buy-Now Pay-Later (BNPL) products nearly quadrupled in 2020 to £2.7 billion. The Government plans to change the law to bring some of the current forms of unregulated buy-now-pay-later products into FCA regulation.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said:
“Buy-Now Pay-Later has grown exponentially. 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.”