The UK government has announced rules to control “buy-now, pay-later” businesses to stop “unconstrained borrowing.” Borrowers’ ability to make purchases will be carefully checked. Lenders, on the other hand, must give borrowers clearer loan information. The Financial Conduct Authority (FCA) would have greater authority over businesses. They will be punished when they violate the law, be subject to stricter rules when marketing their products, and require FCA licenses.

Buy-now, pay-later products are becoming more and more popular, especially among young people. However, they are still mostly not controlled by the government, which raises concerns about consumers increasing their debts. In February of last year, the FCA issued an order requiring the four major buy-now, pay-later businesses—Clearpay, Klarna, Laybuy, and Openpay—to change their contracts to protect clients. But because there were no clear rules, it was forced to use consumer rights law. The new proposed regulations are currently being discussed by the government. The Treasury has made the proposals available to the public and has set a deadline for submissions for April 11th.