In February, the government finally launched its long-anticipated consultation on rules to crack down on the unregulated BNPL sector.

In its response, Innovate Finance says that "all our members are deeply concerned and consider the latest policy proposals and draft statutory instrument to be a material departure from the heavily trailed, ‘tailored and proportionate’ regime for BNPL".

Continues the body: "Our members consider that the measures, in aggregate, are more onerous than those that currently apply to regulated consumer credit products with a greater risk of harm such as credit cards."

Specifically, Innovate Finance say that pre- and post-contractual disclosures are unsuited and disproportionate to the nature of the product and "drive poor consumer outcomes".

These disclosures will lead to friction and "drive consumers away" from BNPL to more expensive alternatives such as credit cards, says Innovate Finance "at such a rate that it casts doubts over the viability of firms’ UK operations".

In addition, the response argues that the government plans do not capture Big Tech and large retailers, which could lead to an anti-competitive credit market.

Innovate Finance also complains that compliance with the rules will be costly, claiming that "there is a range of impact from no less than £1.25 million to £100 million; this is a conservative estimate based on data points shared by our members."