Will Labour regulate Buy Now Pay Later?

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The results from the UK’s general election are in – and Labour has won. 


So, what now? 


The British Retail Consortium has said it’s time for Keir Starmer and the Labour Party to ‘get down to business’ after he emerged victorious in the general election. The new Prime Minister has made various pledges to support the UK retail sector in his manifesto for Labour. 


One burning question which financial service providers and merchants alike continue to ask is what action will be taken around regulating the Buy Now Pay Later space. 


Will Labour introduce regulation for Buy Now Pay Later? 


The short answer is yes. The Labour party has criticised the Conservative government in the past for not acting on its 2021 commitment to regulate the Buy Now, Pay Later space. 


Labour has also promised to prioritize this regulation if they won the next election – which they have.  Labour has previously announced plans to introduce regulations for the Buy Now, Pay Later (BNPL) sector. In fact, Labour’s shadow treasury minister Tulip Siddiq already outlined proposals for a regulatory framework. 


Concerns around the pitfalls associated with BNPL lending are well-documented, and have been the subject of discussion in both parliament and the press for several years now. Labour’s proposal aims to ensure consumer protection and addresses the risks associated with BNPL products. 


What does this mean for merchants? 


Regulating Buy Now, Pay Later will bring short-term, unregulated lending under the remit of the Financial Conduct Authority (FCA). Finance providers and merchants offering finance products to customers will need to: 


– provide clear information to consumers around their credit agreement 


– conduct appropriate affordability assessments 


– offer protections for vulnerable consumers 


…and more. The ruling would also allow BNPL users to seek recourse through the Financial Ombudsman Service, which they currently aren’t able to do. 


As a merchant, if you’re offering short-term finance to customers (less than 12 months and usually interest free), you won’t previously have needed an FCA license to do so. This is different if you’re offering credit extending past 12 months, which is already regulated and therefore subject to FCA rules. 


If the BNPL sector becomes regulated, merchants offering finance will need to either gain an FCA license, or become an appointed representative via a Principal. 


Some retail finance providers, like Zopa, already offer this service and can support you through the process, so be sure to do your research. 


Ultimately, regulation for BNPL is about protecting customers and reducing delinquency and bad debt through responsible lending. If you’re partnered with a retail finance provider who is already adhering to FCA guidance, regulation doesn’t need to impact your business much, if at all. 


How can retail finance help my business? 


Zopa’s finance solution is helping hundreds of UK merchants to significantly increase average order values and conversions, while lowering CPA and cart abandonment. 


When choosing Zopa as your trusted retail finance partner, you also benefit from tailored reporting that offers practical insights for growth – all powered by your dedicated account manager. 


To find out more, browse our finance solutions, read our merchant case studies – or book a demo to start your growth journey now! 

Book a Demo

Please note, a minimum turnover of £5M and minimum trading of 24 months is required to work with DivideBuy.

Please note, a minimum turnover of £5M and minimum trading of 24 months is required to work with DivideBuy.


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