Buy Now Pay Later firm ‘closes customer accounts’ ahead of July 15 rule change | Personal Finance | Finance
Some Clearpay customers have reportedly been left unhappy after their accounts were suddenly closed ahead of the major rule change. Following extensive consultations, the Financial Conduct Authority (FCA) will soon officially be bringing Buy Now Pay Later (BNPL) providers such as Klarna, Clearpay, and PayPal under its strict Consumer Duty umbrella. The FCA will officially begin regulating the BNPL sector from July 15, bringing providers’ deferred payment products into line with other forms of consumer lending.
Under the FCA’s new regulation, BNPL firms must be authorised by the FCA and comply with stricter consumer protection rules. Among the biggest changes are mandatory affordability checks before purchases are approved. Lenders will be required to assess whether customers can realistically afford repayments before extending credit.
Consumers will also receive clearer information about payment schedules, potential consequences of missed payments and the total amount owed, the FCA said.
Providers will have to offer support to borrowers experiencing financial difficulties and, where appropriate, direct them to free debt advice services. Customers will also gain access to the Financial Ombudsman Service if disputes arise.
Some social media users have claimed their Clearpay Buy Now Pay Later accounts have been unexpectedly closed without prior warning, despite having used the services for years. It is understood that the accounts were closed following affordability checks due to the new FCA regulation, and outstanding balances will be written off, the Sun reports.
The FCA said BNPL provides an important source of credit for many, but there are currently no protections in place for those who use it repeatedly and may not be able to afford it. The aim of the new regulation is to help people “navigate their financial lives, with appropriate support for consumers.”
Sarah Pritchard, deputy chief executive at the FCA, previously said: “We want the Buy Now Pay Later sector to thrive – it provides an important source of credit to many – and we will continue to support firms who want to develop innovative new products.
“But crucially, no one should be lent to if they’re unable to repay, because that could worsen their financial situation. Now Parliament has given us the powers, we’re putting in place proportionate protections for the 11 million people who use it.”
The Daily Express has reached out to the FCA and Clearpay for comment.
