The chief of the City watchdog said he does not “buy the argument” that buy-now pay-later (BNPL) firms will quit the UK today after it emerged ministers may shelve planned rules over fears firms would leave.
The government had been pushing ahead with plans to bring BNPL products offered by firms like Klarna and Clearpay within the remit of the Financial Conduct Authority (FCA) amid fears shoppers are landing themselves in mountains of debt.
However, Sky News reported last week that the government was now considering delaying the clampdown, in part because of concerns firms may withdraw from the UK in favour of more light touch jurisdictions.
The reports triggered fears among campaign groups that shoppers may be left exposed to the products indefinitely without safeguards in place.
Speaking with MPs today, chief of the FCA, Nikhil Rathi, rubbished the argument, however, and said regulation had won the backing of the fintech sector.
“You will have firms saying to you ‘this will undermine the competitiveness of the UK market, it will undermine the fintech industry’ – actually a large number of fintechs including Innovate Finance, the industry body, have supported regulation,” Rathi said.
“We will make sure that there is proportionate regulation that supports innovation, but also encourages responsible lending.”
Rathi said he “did not buy the argument” that firms will withdraw in the event of a clampdown and had heard “no suggestion” of delays in his meetings with ministers.
“We’re ready to go,” he added.
Plans to bring the sector under regulation were first tabled by the Treasury in 2021 and were formalised last year, with regulation intended for late 2023.
The Treasury declined to comment this week when asked by City A.M. whether it would delay rules.
Top consumer group Which? was voiced its concern on reports of delays this week, telling City A.M. it was “incredibly concerning” to hear the Treasury is considering shelving its plans to regulate the sector.