Ministers urged not to scrap BNPL regulation

The move, they say, would leave consumers in this space without “vital safeguards” on purchases and protection from unsustainable borrowing.  

It comes nearly two and a half years since the government promised to regulate BNPL as a priority and, while it’s got the regulator to prepare by drafting the law, publishing them and consulting on them, all has now gone quiet.

Citizens Advice, MSE and Which? have called for BNPL regulation, and in July called on the chancellor to press ahead with the new laws – but that letter remains unanswered. As such, today (20 November) the three organisations are saying that to stop or day regulation would be disastrous, and needs to happen now to prevent more falling into financial hardship.  

MSE founder Martin Lewis said: “BNPL, used right, can be a decent way to spread the cost of planned purchases. Yet too often people sign up without realising it is a DEBT, what happens if they can’t pay, or take it on when it’s unaffordable. 

“Regulation was so close we could taste it – the Ts just needed crossing, and the Is dotted. Yet now we’re facing another Christmas, amidst a cost of living crisis, when people under financial pressure are tempted to borrow, and to spend, by this ubiquitous form of debt-payment. 

“The industry says the credit laws are imperfect. They’re right. They’re imperfect for all other debts too – but they’re far better than nothing. And BNPL is a debt – it needs controls and regulation. Crucially, that’d ensure it’s promoted correctly, and would give people a legal right to go to the Ombudsman when it goes wrong. 

“I’d welcome better rules, but they take time, so let’s get the current regulations in place, then all work together to make them better.” 

Citizens Advice’s chief executive Dame Clare Moriarty added: “The cost-of-living crisis continues to have a vice-like grip on people’s budgets, with many being squeezed beyond breaking point. 

“Under such pressure, it’s hardly surprising more and more consumers are turning to quick, all too often unaffordable credit options like Buy Now Pay Later (BNPL). In fact, there’s been a 37% jump in its use since 2021, and we only expect this to increase. 

“While BNPL can be a good option for some, our message is clear: unaffordable credit is never the answer. The government must act on its pledge to bring the BNPL market into line.” 

Which?’s director of policy and advocacy Rocio Concha added: “Buy now, pay later can be a convenient way to pay for millions of consumers. However, a lack of information about the risks attached to using this payment method can mean some users are unaware that they are taking on debt. 

“It’s now been two and a half years since the Government promised to urgently regulate BNPL due to the harm it was causing consumers. With more people turning to BNPL to pay for essentials, that harm has increased. 

“Consumers using this payment method need proper protection – something even BNPL providers agree with. The government must regulate BNPL immediately.”