OCC warns banks on BNPL lending

The guidance says national banks and federal savings associations should maintain underwriting, repayment terms, pricing, and safeguards that “minimise adverse customer outcomes”. Any marketing materials and disclosures should also be clear and conspicuous.

The use of BNPL has soared in recent years, with the likes of Klarna and Affirm attracting millions of customers, prompting more traditional lenders to enter the fray.

However, there are concerns that the industry is piling up debt among cash-strapped consumers, particularly as the holiday season approaches.

Acting Comptroller Hsu says: “As the buy-now-pay-later market grows and we enter the holiday shopping season, the guidance confirms our expectation that OCC-supervised institutions offering these products do so in a responsible manner.”