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FCA secures changes to potentially unfair and unclear T&Cs of BNPL providers

2 Mar 2022

The FCA was concerned there was a potential risk of harm to consumers as a result of the way Clearpay, Klarna, Laybuy and Openpay's T&Css were drafted.

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Going to the Cycle Show? Learn technical tips with seminars presented by Cytech experts - stand G531

24 Feb 2022

Cytech are attending the Cycle Show and will be demonstrating key practices in bike maintenance that are useful for both the trade and... Read more…

Huge Buy Now, Pay Later change could stop users from getting a mortgage or credit card in the future

17 Feb 2022

Buy Now, Pay Later purchases are set to appear on credit reports for the first time, meaning lenders will be able to see the borrowing
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HUDJO: The bike parking app playing its part for the planet

10 Feb 2022

By offering on site bike parking to your customers, you not only create agreener and happier community, you help cut carbon emissions.
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Help to Grow: Digital Scheme & Management Scheme Launched

9 Feb 2022

BEIS has opened its Help to Grow: Digital scheme for applications, aiming to support small businesses with discounted software and free advice.
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It's National Apprenticeship Week 2022!

9 Feb 2022

Apprenticeships benefit everyone involved, particularly in these challenging economic times.
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Levelling Up plan to spread opportunity and prosperity throughout the country

3 Feb 2022

The White Paper itself includes underlying policy plans to invest in cycling networks and improve high streets
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Local Bike Shop Day 2022 set to take place April 30th with increased support and ambitious targets

1 Feb 2022

A key objective for this year involves targeting people that are new to the industry and encouraging them to visit their friendly local bike shop
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New Highway Code changes improve the safety of people walking, cycling and riding horses

31 Jan 2022

Rules forall types of road users have been updated in The Highway Code to improve the safety of people walking, cycling and riding horses.
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Apply for Business Rates Relief

31 Jan 2022

Retailers trading in Scotland and/or Wales are reminded to check their eligibility for business rates relief from April.
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FCA secures changes to potentially unfair and unclear T&Cs of BNPL providers

Posted on in Business News, Cycles News, Political News

Theterms Financial Conduct Authority (FCA) secures changes to potentially unfair and unclear terms in the contracts of Clearpay, Klarna, Laybuy and Openpay. 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.

 

The 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.

Even though the type of buy-now-pay-later agreements offered by these firms are not yet regulated, the FCA was able to use the Consumer Rights Act to assess the fairness and transparency of the terms.

As a result of the FCA's work, the firms are making terms on issues like contract cancellations and continuous payment authorities fairer and easier to understand. In addition, 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.

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.'

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The ACT has previously raised concerns about the improper regulation of BNPL providers and the risks that this brings to potential customers. 

It may be worth having a recap of the ‘Avoid the pitfalls' mini-series that the ACT published to answer the trade's questions about selecting the most suitable retail finance provider.

Key topics examined are why low rates can equal lost sales, the importance of checking the finer details of your agreement and why you should identify who actually lends the money when selecting your provider.

Choosing a finance provider, avoid the pitfalls #1
Choosing a finance provider, avoid the pitfalls #2
Choosing a finance provider, avoid the pitfalls #3

 

If you would like to talk to someone from the ACT or ActSmart about how we can help find the right finance provider for you please get in touch.

C 2 Zero Limited t/a ActSmart & Ride it away is authorised and regulated by the Financial Conduct Authority 657829.

 

 

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