Unauthorised firms face criminal charges if they do not have an FCA-authorised firm approve their financial promotions. Authorised firms must also ensure that all promotional advertising comply with the FCA guidelines, unless an exemption applies.

The FCA is concerned in protecting consumers who fall prey to BNPL promotions on online, especially through social media that do not comply with FCA rules. BNPL adverts often pose risks to customers by encouraging them to take on unaffordable debts, not inform them about consequences of missing payments, and neglect to provide them with information on the impact of BNPL debts on consumers’ credit files.

Executive director of consumers and competition at the FCA, Sheldon Mills, stated: “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.”

The financial watchdog has threatened to enforce compliance using criminal and regulatory authorities. BNPL providers are being closely monitored as the FCA has brought action against 4,226 BNPL firms this year.

A roundtable with BNPL firms was held recently by the FCA to discuss upcoming regulation and compliance. The FCA demanded that BNPL firms provide consumers with debt advice, and financial information, and offer support to borrowers.

Earlier this year the FCA imposed the Consumer Rights Act which required BNPL firms to clarify potentially misleading terms in BNPL contracts.