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EQ Creditservices Buy Now Pay Later

FCA Warns Buy Now Pay Later Firms About Misleading Adverts

Thursday, 22 September 2022

The FCA has indicated that it will be proactively monitoring all BNPL advertisements and those failing to comply with the rules could result in a fine, withdrawal of permissions, or a criminal offence.

It’s a time when energy prices are soaring and 40-year high inflation is impacting the cost of everyday essentials. Understandably many consumers see Buy-Now-Pay-Later (BNPL) as an attractive option to stretch their finances. But, as ever, firms need to be careful in how they sell BNPL credit to customers.

When compared with other lines of credit, a BNPL option at the check-out can offer customers a more seamless shopping experience. It can help the customer to make larger purchases with minimal financial effort and, if payments are paid on time, All very useful for the customer.

But the FCA has voiced concern over how some BNPL lenders are promoting these products without adequately warning of the consequences of unaffordable debt. The regulator has warned that unauthorised firms may be committing a criminal offence if they don’t have an FCA-authorised firm approve their financial promotions. The regulator has written to firms and the British Retail Consortium, calling on them to make sure that all advertisements about BNPL products are ‘fair’.

The FCA commented that it had seen promotions such as social media influencer posts where the benefits of BNPL products have been emphasised without prominent indications about any relevant risks. The FCA is concerned that consumers could be misled if they do not fully understand the repercussions of missed payments and the impact it would have on their credit file and potential charges they may incur as a result.


As we face a cost-of-living crisis, consumers are having to make difficult decisions about their finances and how they pay for goods and services. Firms need to ensure consumers, particularly those in vulnerable circumstances, are equipped with the right information at the right time, so they can make effective, timely and properly informed decisions. It is vital that adverts are clear, fair and not misleading.”

— Sheldon Mills, Executive Director of Consumers and Competition at the FCA

With the rising cost of energy and a further rise in the energy cap expected in early 2023, consumer are going to be under increasing pressure to pay their bills. As such, firms need to ensure that consumers are fully aware of all potential consequences. The FCA’s new Consumer Duty rules require authorised firms to avoid potential harm by monitoring consumer understanding.

The FCA has also indicated that it will be proactively monitoring all advertisements and failing to comply with the rules could result in a fine, withdrawal of permissions, or a criminal offence. To date in 2022, the FCA has taken action against firms breaking the rules. As a result 4,226 promotions have been withdrawn or changed. To protect consumers, the FCA has warned that it will use all of its existing powers against firms where adequate information on the risk and consequences of unpaid or unaffordable dept is not clear to the consumer.

Key takeaways for lenders:

  • Provider consumers with the right financial information so they can make effective, timely and properly informed decisions
  • Be clear about any relevant risks of taking on credit
  • Ensure customers fully understand the impact and repercussions of missed payments.
  • Authorised firms and merchants must ensure that they comply with the requirements in CONC 3 regarding financial promotions

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