Companies offering BNPL in Ireland must be authorised by the central bank

The Central Bank of Ireland has announced an extension to existing regulatory regimes following the commencement of the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Act 2022 (the Act) by the Minister for Finance, which ensures that hire purchase including PCP, consumer hire, indirect credit (e.g. BNPL), providers and servicers will now need to be authorised by the Central Bank.

The legislation allows the Central Bank to close a consumer protection gap so that consumers who enter into hire purchase including PCP, consumer hire and indirect credit (e,g. BNPL) agreements can be protected by the Central Bank’s consumer protection framework including key provisions of the Consumer Protection Code 2012, the Minimum Competency Code 2017, and the Minimum Competency Regulations 2017. Firms providing these services will be required to seek authorisation as a Retail Credit Firm (RCF) or as a Credit Servicing Firm (CSF) as appropriate.

Firms that have been providing these services up to now can avail of transitional authorisation arrangements. The Central Bank expects firms and their staff to meet the necessary minimum competency standards, required of staff with a particular emphasis on staff dealing with consumers in relation to retail financial products, at the earliest possible opportunity.

The Act also introduces an interest rate cap of 23% APR on all credit agreements provided to consumers (other than money lending agreements which have a separate regulatory framework). The Act also ensures that all retail credit firms must comply with Section 149 of the Consumer Credit Act 1995, and notify the Central Bank if they wish to introduce any new charges or increase any charge that has been previously notified to the Central Bank.

Gerry Cross, Director of Financial Regulation – Policy and Risk said:

“We welcome this legislation as it closes a gap so that providers and servicers of hire purchase including PCP, consumer hire and indirect credit (e.g. BNPL) will now need to be authorised by the Central Bank.

Extending our consumer protection framework to these firms will ensure that Irish consumers receive the same protections that we require of other financial service providers. Our aim is to ensure that consumers have the same level of protection no matter where they source their financial services.”