Buy now pay later credit quadruples with campaigners calling for the sector to be regulated
Campaigners and MPs are demanding regulation of the sector as struggling customers increasingly use the deals to buy everyday essentials.
The buy now, pay later (BNPL) market has quadrupled in size since 2020, and it’s expected it’ll reach a record total of £30bn this year. Campaigners and MPs are demanding for the sector to become regulated as the amount UK customers spend online using such deals rose up to £1.7bn a month.
A report by Citizens Advice last November showed that 35% of people who regularly use BNPL deals have used it to pay for essentials in supermarkets. It also found that over a 12-month period, one in five users had missed or been late with a payment.
Customers who miss payments from BNPL products risks seeing their case turned over to debt collectors.
Joe Cox, senior policy officer at campaign group Debt Justice, said: “Some people who are already in financial difficulty turn to ‘buy now, pay later’ because they have run out of other options, but this can pull them further into a dangerous debt spiral that it can take years to recover from. These borrowers deserve the same legal protections that come with all other types of consumer credit.”
A review by Christopher Woolard, a former interim chief executive at the Financial Conduct Authority (FCA), found that BNPL deals were a “meaningful alternative” to payday loans, but represented a “significant potential consumer harm”.
Woolard said in his 2021 report that legislation be changed “as soon as possible” to ensure that all such products were regulated by the FCA.
Struggling with your debts?
Our free debt advice is available to people all over the UK, online or over the phone. We’ll go through your finances in detail and explain your options. You might be surprised at the range of help available. We can:
- check you’re getting all the benefits you’re entitled to
- help you with budgeting
- advise you on debt solutions
There are various debt solutions available that reduce your monthly debt repayments and even write off some of your debt. We’ll let you know if any of them are suitable for you. All our advice is free. Some debt solutions are free, while others come with a fee. We’ll give you all the information you need to make an informed decision and, if we recommend a debt solution and you decide to go ahead, we’ll help get it set up.
You can read our guide for more details before getting in touch if you’d like.
Lydia Bell-Jones
With a background in banking, Lydia has been writing professionally for over five years. She is passionate about helping people improve their personal finances and has a particular interest in the connection between money and mental health.
Related posts
03 Oct 2024
Calls to overhaul standards
02 Oct 2024
32% had errors in credit reports
20 Sep 2024
37% find it hard to repay
20 Sep 2024
Financial Ombudsman wants better support for customers in debt.