Buy now, pay later regulation confirmed by new Government – but timeline remains unclear

Responding to a written Parliamentary question this week, economic secretary to HM Treasury, Tulip Siddiq MP, said "regulating buy now pay later products is crucial to protect people and deliver certainty".

She added that the Government would "work closely with all interested stakeholders" and would set out its plans "shortly". We've asked the Government when this might be and we'll update this story when we know more.

Prior to the General Election earlier this month, Prime Minister and Labour party leader Sir Keir Starmer reiterated his commitment to regulating BNPL in his response to MSE's 'Leader's Debate', adding that the lack of consumer protections in the market "has left millions at risk from bad actors".

Government: 'Regulating BNPL is crucial'

Here's what was said in the full written question and answer:

Martin Lewis and MSE have long called for urgent regulation of the BNPL sector

Martin and MSE, alongside other campaigners, have warned for years that the "explosive" BNPL market needs to be regulated to protect consumers from building up unmanageable debt. In response, the previous Government had announced in February 2021 that regulation would be implemented. 

However, last summer, reports suggested that the then-Government had shelved its plans for regulation, prompting renewed calls for action from Martin and MSE, alongside charity Citizens Advice and campaigns group Which?. Ex-Chancellor Jeremy Hunt later told Martin that regulation would go ahead, though no progress was made by the time of the General Election on Thursday 4 July.

Those original plans, if taken forward by the current Government, would require users to face affordability checks before borrowing from the likes of Clearpay and Klarna. Borrowers with complaints would also be able to take their cases to the free and independent Financial Ombudsman Service and they would benefit from powerful Section 75 rights for purchases between £100 and £30,000 as they do for credit cards now.

BNPL users were over four times as likely to have missed a payment of a bill or credit commitment in three of the six months to January 2023 (27% vs. 6%), according to regulator the Financial Conduct Authority.

To read more about our calls for regulation, see our BNPL Campaigns blog. For more on using BNPL schemes responsibly, see our Buy now, pay later guide.