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Could a Labour government introduce new BNPL regulation? 

Written by Jonathan Axup

When rain-soaked Rishi Sunak called a General Election this week, banks and retailers started to ask themselves, ‘what would a Labour government mean for retail finance?’  

Fortunately, the answer is pretty clear. Keir Starmer’s Labour has consistently voiced its policy regarding retail finance, which continues to be the fastest growing payment method in the UK.  

Three years since Chris Woolard, former interim chief exec at the Financial Conduct Authority (FCA) said there is “an urgent need to regulate all BNPL products”, regulation has still not materialised; a point that The Labour Party continues to wield with purpose. 

For clarity, Buy Now, Pay Later (BNPL) refers to very short-term (usually up to three months) interest-free finance offered by apps such as Klarna that consumers use for low value purchases, such as a pair of shoes or a concert ticket. This type of financial product is unregulated in the UK. 

In November 2023 Labour’s shadow treasury minister Tulip Siddiq published a letter setting out her proposal to regulate BNPL products. She says, “Millions of people using BNPL products have no payment protection or recourse to the Financial Ombudsman Service.” 

In its 2024 Plan for Financial Services white paper, Labour again emphasised its intention to regulate the BNPL sector, underlining the importance it places on this policy. 

Interestingly, Labour says it plans to give users of BNPL products the same protections they have with credit cards. This would give the FCA oversight over BNPL products and give consumers a channel through which to raise complaints and request compensation. 

In February 2024 during a BNPL debate in the House of Commons, Labour MP Lord Livermoor commented, “Labour has set out plans for regulating the sector [BNPL]. That includes a requirement for clearer information, whilst ensuring the same protections for consumers as they get when using a credit card.” 

It remains to be seen which party will claim victory from the July 4th General Election, though clearly retail finance is claimed as a key point of difference between the largest two contenders. 

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