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<p>The Woolard Review into the unsecured credit market found several potential risks
of consumer detriment from interest-free Buy-Now Pay-Later (BNPL) products. The Government
recognises those risks, but also notes that as an interest-free product, BNPL 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 BNPL products in a proportionate manner.</p><p> </p><p>The Government
published a consultation on policy proposals for the regulation of BNPL on 21 October
2021, which closed on 6 January. The consultation sought stakeholder views on how
to define the scope of regulation and how to draw boundaries in legislation between
different types of credit agreements that make use of the exemption from consumer
credit regulation that is currently used by BNPL products.</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 savings to consumers resulting from the use of BNPL products
in 2021, or the impact of BNPL on the UK’s retail industry. Instead, HMT draws on
the research of various stakeholders, including consumer groups and the wider financial
services industry, to inform policy development.</p><p> </p>
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