UK HM Treasury has issued a consultation in regulation of the growing ‘buy now pay later’ (BNPL) sector. This is rather more about the adoption of the existing legislation to this ‘newish’ sector; that some would argue has ‘exploded’ into existence and used exemptions to existing legislation to 'get-around’ the legislation that applies to other financial service products.
The better, and well governed BNPL firms will have anticipated this already, and will have created their products, their documentation and their consumer protection approach to align with an anticipation of such changes. But of course there will be dissent, mainly from those organisations that have 'dived into BNPL' without properly considering the ‘customer protections' and the regulations. It was almost a century ago that Rev. W.H Vanstone said: “All the noise comes from the shallow end”; and The Harvard Business Review regularly publishes articles on how the most successful companies develop products ahead of legislation in order to ‘do the right thing’ and reduce the extreme costs of later change that will occur later.
Accordingly, we fully support the Treasury recommendations and the need for the BNPL sector to be 'brought in-line' with all other consumer protections; and to eradicate the exemptions that have been relied upon to date.
At Riskskill, we help lots of payments businesses and see that those that introduce proper controls and governance and work to align themselves to the spirit of the laws always find ‘the journey smoother’ in the long term; whereas those organisations that have to panic and fight to put things right later always struggle with endless and costly changes. And of course, those that 'start on the wrong track’, usually keep-going in that same direction; which can lead to disaster for the companies, their investors and their customers. The extremes can be seen with Wirecard, and now with FTX/SBF where there was extreme disregard for any or all regulatory requirements!