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Woolard Review: An Urgent Need to Change the Unsecured Credit Market

Published on 2 February 2021, the Woolard Review has highlighted ‘an urgent need’ to regulate all buy now pay later (BNPL) products. The review acknowledges the useful part played by these products as an alternative to payday loans, but considers whether more needs to be done to ensure a healthy, sustainable market. In short, the review suggested:

  • Unregulated credit products need to be regulated as a matter of urgency

  • The debt advice market needs to be healthy to cope with the effects of the pandemic. This includes access to secure, long-term sources of funding, and known problems in the personal insolvency sector need addressing

  • The regulatory framework needs a more outcome focussed approach that considers how products are used in the real world, with the focus on affordability broadened to conduct across the lifetime of the product, and a more consistent approach to forbearance across firms

  • The Government and Regulators need to ensure a holistic approach to key issues including the treatment of the very poorest when they need help

  • There are opportunities to build a better credit information market.

Woolard Review: An Urgent Need to Change the Unsecured Credit Market




The report highlights that credit is an integral part of life in western societies; most people in the UK will need or want access to credit at some point in their lives. Although credit can be vital to many people, it can be harmful if it is unaffordable. The FCA’s current approach to regulated products seeks to limit harms through ensuring that affordability checks are carried out to prevent foreseeable harm, and forbearance when an unforeseen change in circumstances might make it harder to keep up repayments.

Buy now pay later products can be seen as a good alternative to credit by those who might believe their access to the mainstream credit market is limited. The review found that some consumers believed that they were a regulated credit product and came with rights and protections.

Given that some BNPL agreements fall within the perimeter and others are able to rely on an exclusion, the review recommends that regulatory oversight of the new products and business models is required as a matter of urgency. Highlighting that the very basic credit assessment usually completed by most BNPL providers focuses on credit risk to the firm rather than affordability for the customer, the review noted that bringing these products into the regulatory perimeter would ensure that providers properly consider affordability for consumers.

Buy now pay later products can offer cheaper credit than alternatives if they are repaid on time. They are often simple to use, and for providers that offer apps, customers are able to track their repayments. However, offers can be confusing for customers to understand and are sometimes marketed and advertised in a way that encourages customers to make impulsive decisions and could potentially pose a risk of harm to vulnerable consumers and specifically to those with mental health problems.

So, for BNPL products that aren’t regulated, there are issues around affordability checks, the fact that consumers don’t always understand that the product is not regulated credit meaning that their ability to make an informed decision is impaired, and ultimately, an increased risk of indebtedness through the use of multiple products with different providers being unaware that individuals have struggled with repayments with other products.

The FCA will now push forward with their case for regulating BNPL firms, aiming to develop a proportionate regulatory framework for previously exempt BNPL providers. This will almost certainly include rules around conducting affordability checks, forbearance and the identification of vulnerable customers. The business model of most BNPL providers is based around ease of use, so active identification of vulnerability may present a challenge if the ‘quick-click’ access is to be maintained.

The FCA doesn’t mandate how firms identify customer vulnerability, but for customer journeys that predominantly take place via digital methods, they do suggest understanding their customer base well enough to identify characteristics of vulnerability so that support can be offered proactively to individual customers. It is, therefore, all the more important that firms that use this type of analytics for broad identification have a strong policy on the treatment of vulnerable customers and a clear and well communicated process for identification and support.

For almost all providers, a major element of identification will be in their frontline staff supporting customer care, payment difficulties and complaints issues. Understanding the customer base is an important first step, but ensuring that frontline staff are able to identify a potentially vulnerable customer, are able to question the customer appropriately to gauge how they are affected, whether this impacts on their ability to pay, and for how long they’re likely to be affected, in order to evaluate which of the available support options are best for the customer’s individual situation is a basic requirement.

In the current circumstances, a clear policy and process for the support of vulnerable customers isn’t just a regulatory issue, it’s also an ethical one. As more individuals are likely to experience circumstances that make them susceptible to vulnerability, recognising when they might need some extra support, and either making suggestions, offering appropriate options or connecting them with someone who can help them not only makes a tangible difference to their lives, it also helps to keep the customer returning to the firm, and the economy going during difficult times.

Training frontline staff so that are able to confidently identify, speak to, and support vulnerable customers is key to the fair treatment of these customers. We offer a dedicated online training course on the fair treatment of vulnerable customers. Priced at just £15 per user, the course is accessible at the delegate’s convenience and provides a certificate upon successful completion, allowing firms to track and record each user’s progress.

For large groups, we can offer a simplified enrolment service and pricing, simply email


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