Millions of people will be protected through strengthening regulation of interest-free Buy-Now Pay-Later credit agreements, under plans announced by the government today.
Lenders will be required to ensure loans are affordable and rules will be amended to ensure advertisements are fair, clear and not misleading.
UK Government will expand rules to cover other forms of unsecured short-term credit that pose similar risks to consumers, such as those used for dentistry work. Millions of people will be protected through strengthening regulation of interest-free Buy-Now Pay-Later credit agreements, under plans announced by the government today (20th June).
Buy-Now Pay-Later credit agreements can be a helpful way to manage your finances, allowing people to spread the full cost of a purchase over time. However, people do not currently have the usual full range of borrower protections when taking out this type of loan and they are rapidly increasing in popularity, resulting in a potential risk of harm to consumers.
Under plans set out by the government today it confirmed that lenders will be required to carry out affordability checks, ensuring loans are affordable for consumers, and will amend financial promotion rules to ensure Buy-Now Pay-Later advertisements are fair, clear, and not misleading. Lenders offering the product will need to be approved by the Financial Conduct Authority (FCA), and borrowers will also be able to take a complaint to the Financial Ombudsman Service (FOS).
Economic Secretary to the Treasury, John Glen said: “Buy-Now Pay-Later can be a helpful way to manage your finances but we need to ensure that people can embrace new products and services with the appropriate protections in place.
“By holding Buy-Now Pay-Later to the high standards we expect of other loans and forms of credit, we are protecting consumers and fostering the safe growth of this innovative market in the UK.”
Today’s consultation response sets out the government’s proposals for regulation of the sector. Given its complexity, the government will publish a consultation on draft legislation toward the end of this year. Following this, the government aims to lay secondary legislation by mid-2023, after which the FCA will consult on its rules for the sector.
The government has also confirmed that other forms of short-term interest-free credit, such as those used to pay for dental work or larger items like furniture, will be required to comply with the same rules announced today, given the risks posed are similar and consumers should receive consistent protections from similar products.
These rules will apply to businesses who partner with a third-party lender to provide credit, and the government is asking for further stakeholder feedback to confirm whether they should also apply to online merchants who directly offer credit for the purchase of their own products.
Today’s announcement forms part of the government’s plan to grow the economy to tackle the cost of living. The Chancellor has provided £37 billion of support to help, including providing the eight million most vulnerable British families with at least £1,200 of direct payments this year – and giving every household right across the UK £400 to help with their energy bills.
The vast majority of consumers are taking steps to reduce their environmental impact, but many can struggle to take action in the areas that cause the greatest harm, a Which? study has found, reinforcing the need for consumers to be supported in making more sustainable choices.
The consumer champion surveyed more than 3,500 members of the public asking them which actions, from a list of 10, they do regularly that reduce their impact on the environment, such as limiting their use of single-use plastic. It found around nine in 10 (87%) take at least one action to explicitly minimize their environmental impact.
Which? found the most common measure consumers take is recycling, with 93 per cent of people regularly recycling household waste such as paper, glass and plastic, and four in five (80%) do it explicitly for sustainability reasons.
Around eight in 10 (81%) said they regularly use home products in energy-efficient ways, for example washing clothes on eco mode or at a lower temperature, with just over half (53%) doing this for sustainability reasons.
Three-quarters said they frequently avoid single-use plastic and non-recyclable products (76%) and switch off appliances at the wall rather than leaving them on standby (74%).
While reducing plastic waste and energy consumption will have a positive impact on the environment, the types of food consumers eat, the way they choose to get around and the types of vehicles they use cause the greatest harm to the environment. However, a lower proportion of people are taking actions that reduce their impact in these areas.
Only around two in five (42%) told Which? they regularly cut down or avoid consuming meat and dairy products, with just one in five (22%) doing this for reasons to do with sustainability. Almost half (46%) said they opt for public transport, walking or cycling, with one in five (22%) indicating they were motivated by sustainability reasons.
This suggests there are barriers preventing more people from adopting sustainable forms of transport and types of food, and perhaps more support is needed to encourage consumers to make these lifestyle changes.
Other common measures consumers take to lower their environmental impact include repairing rather than replacing items (72%) and borrowing or buying second-hand rather than buying new products (52%).
Which? also found more than half (55%) are regularly taking at least four measures to reduce their impact on the environment, while a third (32%) are doing six or more. Consumers aged under 55 more commonly report doing more to support the environment, with over a third regularly doing six or more actions to help the environment, compared to a quarter aged 55 and above.
These findings come as Which? launches a brand new podcast called “Which? Investigates” to mark World Environment Day, exploring consumer-related sustainability issues.
Hosted by science journalist & producer Greg Foot, the 8-episode first season of ‘Which? Investigates’ focuses on putting claims of sustainability under the spotlight. From plant-based food to plastic-free products and electric cars, Greg will find out what genuinely reduces our environmental footprint, and what’s simply green-washing, to give consumers the confidence to make better choices for themselves and the environment.
Sue Davies, Head of Consumer Rights and Food Policy at Which?, said:“Consumers have become increasingly aware of their carbon footprint, and while our research shows many people are doing what they can to support the environment, far fewer people are taking action in areas that cause the greatest harm to the environment.
“Which? is committed to helping consumers to adopt more sustainable behaviour and will continue to work with policymakers and businesses to ensure people get the right amount of support to make choices that are less harmful to the environment.”
A coalition of organisations championing consumers, and representing civil society and business, have today joined forces to warn that the UK risks failing in its ambition to be the safest place in the world to be online unless it uses new laws to protect people from an avalanche of online scams.
In a joint letter to the Home Secretary and Digital Secretary, 17 organisations have urged the government to include online scams in its proposed Online Safety Bill – which could be announced in next week’s Queen’s Speech – so that consumers are better protected against the devastating financial and emotional harm caused by these crimes.
The organisations that have signed the letter include Which?, the Money and Mental Health Policy Institute, Carnegie UK Trust, UK Finance, the Personal Investment Management and Financial Advice Association (PIMFA), the City of London Corporation, City of London Police, The Investment Association, Association of British Insurers (ABI), MoneySavingExpert and Age UK.
From using social media to stay in touch with friends and family to using search engines to research potential investments at a time of record-low interest rates – the coronavirus crisis has meant people are spending more time online than ever before.
However, scams have escalated in the past 12 months, with Action Fraud figures showing that £1.7 billion was reportedly lost to scams in the last year. Many criminals have shifted their activity online. Action Fraud estimates that in the year to June 2020, 85% of all fraud was cyber-enabled.
The actual financial losses are likely to be much higher and do not capture the devastating emotional impact on victims. Research also shows that vulnerable people, including those experiencing mental health problems, are more at risk of falling victim to these crimes online.
In their letter, the organisations write: “Online platforms play a pivotal role in enabling criminals to reach and defraud internet users through the hosting, promotion and targeting of fake and fraudulent content on their sites, including adverts that they make significant profits from.
“Yet platforms have very little legal responsibility for protecting their users, despite often being the best placed to tackle harmful content.
“While we recognise there are initiatives being progressed by the Government designed to tackle aspects of online fraud, there is a growing risk that current plans for future regulatory frameworks are not taking a comprehensive approach to the threats faced by consumers and do not reflect the extent or urgency of the problem.”
UK Finance figures show a 32 per cent increase in investment scam cases in 2020, which are often promoted through adverts on search engines and social media offering higher than average returns.
One victim of such a scam was Maria Teresa Jackson, 63, a teacher. Ms Jackson was tricked by an advert she saw on a social media site, featuring a fake news story with fabricated quotes from celebrity adventurer Bear Grylls, who supposedly told how he had become a millionaire by trading in Bitcoin.
She clicked the button and put in her details and soon received a phone call from a “financial advisor” who showed her around a professional looking website, and was very knowledgeable about trading. Over time she was persuaded to transfer increasing amounts of money to the scammer.
It later became clear that the Bitcoin did not exist. Scammers stole nearly £120,000 and First Direct, her bank, has so far refunded her half that amount.
She said: “I felt completely sick. I’m overall better now but often I get flashbacks of certain events and that upsets me a lot. I usually get them at night when I’m in bed and when that happens, it sets the tone for a bad night’s sleep.”
A spokesperson for First Direct said:“We would like to offer our sincerest sympathies to Ms Jackson, and fully appreciate how the situation has impacted her. Sadly, there are unscrupulous individuals who carry out criminal activities without any regard for the effect this will have on their victims.
“Although we believe Ms Jackson could have exercised more caution and carried out further checks before making the payments, we could also have offered more effective fraud warnings. So on that basis we’ve refunded 50% of the payments made.”
A wide-ranging consensus has emerged across industry, regulators and consumer groups on the urgent need for action to tackle scams and the critical role that online platforms must take in doing more to protect their users.
The coalition of groups is calling for online platforms to be given a legal responsibility to protect users from fake and fraudulent content on their sites that lead to scams. The government now has a perfect opportunity to deliver this in its proposed Online Safety Bill, which could be announced as part of next week’s Queen’s Speech on 11 May.
Anabel Hoult, CEO of Which?, said: “The biggest online platforms have some of the most sophisticated technology in the world, yet they are failing to use it to protect scam victims who are suffering devastating financial and emotional harm due to the flood of fake and fraudulent content posted online by criminals.
“The time for self-regulation is over, as clearly it has not worked. The case for including scams in the Online Safety Bill is overwhelming and the government must take the opportunity to act now. Online platforms must be given a legal responsibility to prevent, identify and remove fake and fraudulent content on their sites so that their users are better protected.”
Martin Lewis, Founder of the Money and Mental Health Policy Institute and MoneySavingExpert.com, said:“It beggars belief that the government’s Online Safety Bill could ignore the epidemic of scams that the UK faces – but that’s the plan. Scams don’t just steal people’s money, they can take their self-respect too and those with mental health problems are three times more likely to be affected.
“The policing of scams is critically underfunded, leaving criminals to get away with these frauds with impunity. The government has a chance to at least deny them the ‘oxygen of publicity’ by making big tech responsible for the scammers adverts it is paid to publish.
“I plead on bended knee for the government to take that opportunity, by putting scams in the Online Safety Bill. Failing to do so will betray its promise to create world-leading online protection and will leave vulnerable people defenceless against online crime in the midst of a global pandemic.”
David Postings, Chief Executive at UK Finance, said: “Fraud has a devastating emotional impact on victims and even when the victim is reimbursed, the stolen cash is used to fund serious organised crimes which damage our society, including terrorism, drug trafficking, and child sexual exploitation.
“The banking and finance industry is tackling fraud on all fronts, but we can’t do it alone. We need other industries including the online platforms exploited by criminals to join the fight and take responsibility for criminal activity that is happening on their doorstep.
It’s not right that online giants are effectively profiting twice – once from criminals marketing scams on their platforms and again from organisations having to advertise fraud warnings to consumers.
“We are strongly calling on the government to take a major step forward by including economic crime in the upcoming Online Safety Bill and helping ensure tech giants take responsibility for their part in protecting consumers from the scourge of online fraud.”
William Perrin, Trustee at Carnegie UK Trust, said:“Our work at Carnegie UK Trust has set out the case for a systemic, statutory duty of care that would make online platforms take responsibility for the design and processes of their services to reduce online harm.
“This new research underlines the urgent need for action to protect consumers from harms such as online fraud and scams – and the Online Safety Bill is the way to do it. Both the City of London Police and the National Economic Crime Centre have told Parliament that their current powers are not enough to limit the spread of online fraud and scams.
“It is vital that the Government reconsider their inclusion in the Online Safety Bill.”
Liz Field, Chief Executive of PIMFA, commented:“The financial services industry has along with our partners been calling for financial harm to be included in the Online Safety Bill for some time.
“It is now vital that the Government takes action to provide better protection for consumers online by ensuring online search and social media firms take greater responsibility for what we, their customers, see on their platforms.
“The Online Safety Bill could provide a clear legal framework that would protect consumers from ever more sophisticated online fraud, largely perpetrated by organised criminals. PIMFA and our partners in this campaign continue to urge the Government to include financial harm in the Online Safety Bill.
“Doing so would save thousands of victims suffering enormous financial and mental distress and would be one of the best possible ways to disrupt organised crime.”
New rules will require ticket resellers to provide more information around resold event tickets, protecting consumers from rip off prices
Resellers now have to supply any unique ticket numbers (UTN) to the buyer to identify the ticket’s seat, standing area or location
Changes build on government’s action to increase transparency for consumers in the secondary market
Fans of live events are set to benefit from new rules coming into force today which will demand more information from sellers on secondary ticket websites to better protect fans from rip-off prices.Continue reading New rules will protect fans from ticket touting
