BNPL risks addressed in new guidance; expects ‘safe, sound,’ fair access to services

Risks associated with “buy now, pay later” (BNPL) lending programs are addressed in guidance issued Wednesday by the regulator of national banks.

The guidance, according to the Office of the Comptroller of the Currency (OCC), focuses on the risk management of the BNPL loans. The OCC describes the loans as payable in four or fewer installments and that carry no financial charges.

The guidance also notes that banks should maintain underwriting, repayment terms, pricing, and safeguards that minimize adverse customer outcomes and should ensure that marketing materials and disclosures are clear and conspicuous. In addition, the OCC said, BNPL lending should include safeguards to minimize adverse customer outcomes.

The agency also said in a release that “it expects banks that offer BNPL loans to do so in a manner that is safe and sound, provides fair access to financial services, supports fair treatment of consumers, and complies with applicable laws and regulations.”

OCC Issues Guidance on ‘Buy Now, Pay Later’ Lending