Interactive Investor

Buy now pay later regulation can’t come soon enough

6th January 2022 16:04

Myron Jobson from interactive investor

Our personal finance campaigner raises the alarm as the increase in the cost of living risks even more people turning to BNPL schemes to help manage their finances.

  • The HM Treasury consultation on the regulation of Buy Now Pay Later (BNPL) products closes before midnight tonight (6 January).
  • Which? has today published new research on the sector, revealing a lack of understanding of the risks involved among consumers.

Commenting, Myron Jobson, Personal Finance Campaigner, interactive investor, says: “The BNPL industry is overdue for some serious regulatory measures to protect consumers.

“The BNPL market has mushroomed, with the use of such products having nearly quadrupled in 2020 to reach £2.7 billion and has expanded beyond providing a means to purchase non-essential items without immediate payment. You can now buy essential groceries through some BNPL services. Regulation can’t come soon enough as the increase in the cost of living risks even more people turning to BNPL schemes to help manage their finances.

“BNPL schemes aren’t inherently bad. They offer the flexibility of purchasing and receiving items without the need to pay for them in full right away, but in instalments over a given period without incurring interest. The worry is they feed into the consumerist ‘instant gratification’ culture we live in. While it might be tempting to delay payment – and the adverts can often be very enticing and sometimes misleading - it often can be a slippery slope to being tangled in debt.

“New research (published today) by Which? revealed people aren’t aware that BNPL schemes are a form of credit, and most users admitted to skim reading the T&Cs or simply ticked a box to say they had read them. It is only right that consumers are fully aware of the risks involved and the consequences of missed payments, which isn’t always obvious.

“Above all, the budding popularity of BNPL underlines the importance of more robust financial education in school. Lessons on debt should explicitly cover BNPL as this form of lending is particularly popular among young adults.”

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