FCA Warns BNPL Providers About Misleading Financial Promotions

The FCA has warned firms that offer Buy Now Pay Later (BNPL) products that although some agreements are unregulated the financial promotions of all BNPL products must comply with the financial promotion rules.

Unauthorised firms might be committing a criminal offence if they don't have an FCA-authorised firm approve their financial promotions. Authorised firms selling unregulated or exempt BNPL products must comply with the relevant rules unless an exemption applies. This includes that their BNPL financial promotions must be clear, fair and not misleading.

The FCA is concerned consumers could be misled if BNPL financial promotions do not comply and has seen financial adverts on websites and social media, including posts by social media influencers, which may breach FCA rules.

"As we face a cost-of-living crisis, consumers are having to make difficult decisions about their finances and how they pay for goods and services,"Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said."Firms need to ensure consumers, particularly those in vulnerable circumstances, are equipped with the right information at the right time, so they can make effective, timely and properly informed decisions. It is vital that adverts are clear, fair and not misleading."

Although the FCA does not yet regulate BNPL products it has been proactively addressing concerns about potential harms to consumers.

The FCA is continuing to engage with BNPL providers and are proactively monitoring the market to ensure expectations are met. The FCA has confirmed it will use criminal and regulatory enforcement powers if it sees promotions that do not comply. So far this year, FCA action against firms that have breached its rules have led to 4,226 promotions being changed or withdrawn.