Miscellaneous Regulated activities and application of Consumer Credit Act 1974
Buy-Now-Pay-Later products are credit products which charge no interest and are repayable in twelve or fewer instalments in less than twelve months. Currently, these products do not fall within the scope of regulation under FSMA. This is because they make use of an exemption in article 60F(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ("the Regulated Activities Order"). The Regulated Activities Order defines the scope of regulated activities.
	The material effect is that Buy-Now-Pay-Later products do not currently benefit from the consumer protections that regulated credit agreements are subject to. Regulated credit agreements must comply with the relevant provisions of the Consumer Credit Act 1974 and secondary legislation made under it, such as providing certain information to borrowers in a prescribed format. Firms offering regulated credit agreements must be authorised by the FCA and comply with relevant FCA rules, such as undertaking affordability and creditworthiness assessments.
	This exemption was originally designed to exempt firms undertaking low risk, day-to-day business activities, such as deferring payment for goods and services, from the burdens of regulation.
	The Government has been following the growth of currently unregulated, interest-free Buy-Now-Pay-Later products as their use and prominence in online transactions has grown.
	On 16 September 2020, the FCA announced that its former interim-CEO, Chris Woolard, would undertake a review into the unsecured credit market. The final report of this review was published on 2 February 2021. The review found that currently unregulated Buy-Now-Pay-Later products could give rise to consumer detriment, and recommended that the necessary amendments to legislation be made to bring Buy-Now-Pay-Later products within the scope of regulation before any widespread consumer detriment could crystallise.
	The Government noted the evidence in the review, and agreed with its conclusion that Buy-Now-Pay-Later products should be brought within the scope of regulation under FSMA. However, the Government also recognises the utility that these products can have for consumers in managing their finances that the Act therefore gives HM Treasury the ability to bring interest-free Buy-Now-Pay-Later products into the scope of FCA regulation in a proportionate way.
	The Government will bring forward secondary legislation to bring currently unregulated Buy-Now-Pay-Later products into regulation when Parliamentary time allows. The final approach to regulation will be determined following a public consultation.