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.

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