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<p>HM Treasury regularly monitors changes in the consumer credit market as part of
the normal process of policy development.</p><p> </p><p>The Woolard Review into the
unsecured credit market found several potential risks of consumer detriment from interest-free
Buy-Now Pay-Later products, including the absence of information given to consumers
about features of Buy-Now Pay-Later agreements. The Government recognises those risks,
but also notes that as an interest-free product, Buy-Now Pay-Later can often be lower-risk
than other forms of borrowing and a useful tool to help consumers manage their finances.
That is why, on 2 February 2021, the Government announced its intention to regulate
Buy-Now Pay-Later products in a proportionate manner.</p><p> </p><p>The Government
published a consultation on policy proposals for the regulation of Buy-Now Pay-Later
on 21 October 2021, which closed on 6 January. The consultation included proposals
to apply Financial Conduct Authority (FCA) rules on pre-contract disclosure and adequate
explanations to Buy-Now Pay-Later agreements. These rules require firms to make adequate
pre-contractual explanation to ensure the customer is in a position to assess whether
the agreement is suitable for their needs and financial situation.</p><p> </p><p>The
Government is now reviewing responses to this consultation and considering next steps
and intends to publish a consultation response in the spring.</p><p> </p><p>HMT does
not hold information regarding the number of 18- to 24-year-olds who have been referred
to debt collection agencies by Buy-Now Pay-Later in the last 12 months, or the amount
collected in late payment fees by the Buy-Now Pay-Later sector in each of the last
three years. Instead, HMT draws on the research of various stakeholders including
consumer groups and the wider financial services industry.</p>
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