‘Buy now, pay later’ regulation is needed, says Martin Lewis
The consumer champion said regulation ‘doesn’t curtail the industry’, following concerns that a crackdown could potentially be shelved.
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Your support makes all the difference.Martin Lewis has urged the Government to press ahead with plans to bring “buy now, pay later” services under regulation.
It follows reports over the weekend that a crackdown on the sector could potentially be shelved, amid concerns that some providers could exit the UK market.
Posting on Twitter, Mr Lewis said: “Yes, BNPL (buy now pay later) used right can help people borrow interest free to spread necessary costs, but it’s still a debt.
“Protection’s needed for when it’s not right. Regulation doesn’t curtail the industry, it’d just means that for both existing firms & new entrants:
“- Fairness rules apply like with other debt
“- If treated badly you can go to @financialombuds (the Financial Ombudsman Service)
“- Firms must be honest that this is borrowing not market it as a lifestyle choice.”
The MoneySavingExpert.com founder added: “Clearly amidst a cost of living crisis, when many are desperate and living on deficit budgets – all forms of major consumer debt need the protections embedded which regulation gives.
“I’d urge @Jeremy_Hunt (Chancellor Jeremy Hunt) to continue with the plans, which we were promised years ago, and have huge support amongst consumer groups (and some BNPL firms) and ensure it’s fully regulated like the debt it is.”
BNPL can be a handy way to spread the cost of purchases, while potentially avoiding the need to pay interest.
But there have been concerns about the ease at which people can build up significant amounts of debt relatively easily, with many BNPL products appearing at online shopping checkouts. Some people may end up borrowing more than they can comfortably afford to repay.
In February, a consultation was launched to look at how firms would be brought under the scope of the Financial Conduct Authority (FCA).
The consultation looked at how firms would need to comply with FCA rules, including how they would need to spell out the key information about loans to customers.
The Government previously said the new regulations are could help protect an estimated 10 million customers.
Regulation of 'buy now, pay later' products must be proportionate so borrowers are protected, while still being able to access these useful interest-free products
The Treasury said it is reviewing consultation responses.
A Treasury spokesperson said: “Regulation of ‘buy now, pay later’ products must be proportionate so borrowers are protected, while still being able to access these useful interest-free products.
“No decisions have been made as we are reviewing the responses to our recent consultation and will report back in due course.”
Sky News previously reported that Treasury officials had been told during recent talks with the industry that some of its biggest players could quit the UK market in the if “heavy-handed” regulation took place.
It is thought that this would not necessarily mean scrapping proposals.
“One option is to look at this as part of work to update the Consumer Credit Act, which the Treasury announced last year,” Sky quoted a source as saying.