Buy-now, pay-later firms warned of being regulated soon


COMPANIES that offer buy-it-now-pay-later lending deals and companies that offer hire-purchase agreements have been warned to prepare for regulation.

It’s a new law that will allow the central bank to oversee these “easy credit” deals, and the companies offering them are due to be passed by the Oireachtas this year.

The provision of in-store credit and online buy-now-pay-later offers has grown exponentially here, especially for online purchases.

A “buy now, pay later” arrangement is just as likely to be offered for a $99 dress as it is for a $1,500 sofa.

The 2021 Consumer Protection Bill (regulating retail credit and credit service businesses) is progressing through the Houses of the Oireachtas and is expected to come into force later this year.

A document has now been sent out by the regulator to those offering these lending deals.

It states: “The legislation will, inter alia, expand the licensing requirements of the Central Bank of Ireland (Central Bank) and consequently require compliance with relevant central bank statutory codes of conduct.”

Currently, the provision of buy-now, pay-after credit is outside the purview or oversight of the central bank, despite constant calls for these installment loan firms to be regulated.

Since they have not yet been authorized by the central bank, providers can offer their customers high-interest loans without having to comply with the bank’s consumer protection code.

Among other things, the code provides protections for borrowers to avoid being harassed with unwanted phone calls at home and in the office when they default on their payments.

Lenders usually have to apply for approval from the central bank.

Now the central bank has told firms that offer unregulated credit facilities that they must apply to the central bank for a license as a retail lending company.

The law also provides for the regulation of companies servicing these arrangements, which require accreditation as a credit service company.

And staff performing these newly regulated activities have four years to be trained to meet the central bank’s minimum code of competence.

The bank’s consumer protection code is being amended to ensure its provisions apply to buy-now, pay-later businesses and hire-purchase businesses.

A loophole in the Consumer Credit Act has left these companies unregulated.

Because the loans are not made available to the customer directly as cash.

Instead, items are purchased online or directly from a store, creating a separate loan for the repayment.

This credit is offered by a separate, indirect credit provider.

One of the largest unregulated retail loan providers is Australia-based Humm, formerly Flexi-Fi.

It says it offers credit in more than 1,000 retail outlets across Ireland. Buy-now, pay-later firms warned of being regulated soon

Fry Electronics Team

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