Government 'needs to pick up pace' says Martin Lewis as consultation launched to regulate Buy Now, Pay Later (BNPL)
In response to the launch of the Government’s consultation into Buy Now, Pay Later (BNPL) regulation, Martin Lewis says that proposed consumer protections are welcome, but hopes to see more addressing how BNPL providers design and market their services.
Martin Lewis, founder of MoneySavingExpert.com, said: “Buy Now, Pay Later (BNPL), has exploded as a form of payment in the UK over the last few years. Regulation is something I’ve long called for and it’s good to finally have proposals from the Government. Yet it really needs to pick up the pace, taking so long to do this has given these firms free rein to continue, unregulated, this Christmas.
“BNPL isn't automatically a bad thing to do. Done right, used right, it's interest-free, and can be a useful tool to help people spread costs. However, what’s most telling is it is sold to retailers as an easy way to get people to spend more – this, combined with the fact it is most popular amongst younger adults, is a big red flag. So it is vital to get this regulation right.
“The strongest parts of the proposal are those which suggest you will be able to take BNPL firms to the Financial Ombudsman if things go wrong – a crucial protection – and the possibility of extending the Section 75 protections that apply to credit cards to BNPL. These changes are vitally needed.
“However, I think more flesh on the bones is needed on the plans to tackle problems with the design and marketing of BNPL. These firms are slick, and their often irresponsible advertising and tech push is a recipe for encouraging overspending and consumer harm.”