Draft Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025

Daisy Cooper Excerpts

Wednesday 25th June 2025 General Committees

[Daisy Cooper (St Albans) (LD)]

We Liberal Democrats warmly welcome this statutory instrument, which will introduce long-overdue consumer protections. We particularly welcome the fact that buy now, pay later will fall under FCA regulation, as well as the fact that consumers will have access to the independent complaints system under the Financial Ombudsman Service. We are also delighted to see the introducing of affordability checks. All three of these measures are consistent with our own party policy, which we debated fiercely among our membership at our autumn conference last year.

However, like the official Opposition, we are concerned about the proposed merchant exemptions. We know that merchants who provide credit directly will be outside the scope of this particular regime, and we know that respondents to the Government’s consultation raised concerns that exempting these merchant providers, where the provider of the goods and services is also the provider of the credit, could create an uneven playing field. My understanding is that the Government have committed to closely monitor the merchant-provided market for buy now, pay later, and to take action if there is evidence of consumer harm. Can the Minister set out how the Government intend to closely monitor the situation, and over what timeframe?

I have a few other questions for the Minister. If he is not able to answer them, I would be very grateful if he were kind enough to write to me with the answers. First, will the Government also be putting rules in place to stop buy now, pay later firms from engaging in harmful or misleading advertising, and requiring them to make it clear that buy now, pay later is a form of credit? Could he clarify whether that is covered by this statutory instrument, or are further measures needed? Can the Government confirm whether buy now, pay later will be brought under the consumer duty rules for financial products, which require that key information is clearly set out and that products are designed to enable informed consumer decisions? Could the Minister also outline whether the FCA will have the powers to consider setting a centralised cap on late fees for buy now, pay later, to promote fair and consistent treatment across all the different platforms?

On two slightly separate but related issues, do the Government have any broader plans to improve awareness of debt relief orders, and to seek ways to expand access to the scheme? We know that there are around 3.7 million UK adults in debt who are unaware that they can seek help through those debt relief orders. More broadly, do the Government have any plans during this Parliament to look at widening access to low-interest credit, such as through community banks, which would be a completely alternative source, so that people would not have to use buy now, pay later mechanisms in the first place?