Rathi was speaking at a Treasury Committee meeting yesterday where he responded to claims made earlier this week that the FCA was considering scrapping plans to supervise the buy now, pay later lending sector.

He said: “That has not been suggested to me in any of my interactions with ministers…

“We’re ready to go. The draft legislation has been published, it’s obviously a matter for ministers and Parliament to finalise the legislation. Upon its finalisation, we would look to bring these firms into regulation within 12 months.”

Sky News reported on Monday that Treasury officials have been told that a number of the BNPL industry’s biggest players could quit the UK market if they are subjected to “heavy-handed” regulation. If firms such as Klarna and Clearpay withdrew from the UK, MPs feared this could reduce the availability of low interest credit products.

Consumer groups and debt charities expressed alarm at the idea that the sector would continue to be unregulated.

But Rathi said he did not “buy the argument” that BNPL firms will quit the UK if regulated.

“You will have firms saying to you ‘this will undermine the competitiveness of the UK market, it will undermine the fintech industry’ – actually a large number of fintechs including Innovate Finance, the industry body, have supported regulation,” Rathi said. “We will make sure that there is proportionate regulation that supports innovation, but also encourages responsible lending.”

Plans to bring the sector under regulation were first tabled by the Treasury in 2021 with regulation intended to start at the end of this year.