Buy Now, Pay Later - Standing by Consumers During the Cost-of-living Crisis

Submitted by: 10 party members
Mover: Sarah Olney MP (Spokesperson for Business and the Treasury)
Summation: Lord Fox (Lords Spokesperson for Business)

Conference notes with concern that:

1. The outgoing Conservative Government oversaw a devastating cost-of-living crisis which has left people's household finances stretched to breaking point.
2. Millions of households are in arrears on their bills and, as of July 2024, the number of people seeking help with unsustainable debt through a Debt Relief Order (DRO) is at a record high.
3. Support organisations have seen a surge in those seeking help with Buy Now Pay Later (BNPL) issues, with Citizens Advice seeing a doubling of cases in May 2024 compared to the year before.
4. The number of BNPL users has increased significantly in recent years, with frequent users of BNPL more likely to be in financial difficulty and more than two million people using BNPL to purchase groceries in 2023.
5. While for many people BNPL can offer convenience and flexibility, it remains unregulated by the Financial Conduct Authority (FCA) and doesn't meet standards set by the Consumer Credit Act 1974 for other forms of credit, leaving consumers exposed to significant financial harm.

Conference further notes with concern a number of risks arising from the lack of regulation of BNPL products, including:

1. Misleading and irresponsible advertising, including via social media, inappropriately encouraging the use of credit.
2. A lack of transparency leaving many BNPL customers unaware that they are using an unregulated borrowing product, with key information about potential consequences hidden in long terms and conditions pages.
3. Digital design making it hard for consumers to make informed decisions - such as presenting BNPL as the default payment method when shopping online.
4. A lack of proper affordability assessments that take into account borrowing from different BNPL platforms, leaving users at risk of amassing large debts across several providers.
5. BNPL providers not sharing data with credit reference agencies, leaving regulated credit providers (e.g. banks) without a complete view of a consumer's financial position when assessing their affordability - risking even higher levels of indebtedness.

Conference believes that regulation of BNPL should:

1. Be balanced and proportionate - mitigating harms while ensuring consumers can continue to use BNPL products safely.
2. Have the overarching aims of promoting consumer protection; affordability; transparency of information; and fair treatment of people in financial difficulty.

Conference therefore calls on the Government to:

1. Protect people struggling with the cost-of-living crisis by rapidly legislating to bring BNPL within the Financial Conduct Authority's regulatory remit.
2. Put rules in place stopping BNPL firms from engaging in harmful or misleading advertising, making it clear that that BNPL is a form of credit.
3. Bring BNPL under 'consumer duty' rules for financial products, which require that key information is clearly set out; products are designed to enable informed decisions by consumers; and that firms must consider whether users are in vulnerable situations, such as financial or mental health distress.
4. Require that fair and consistent support is available to all BNPL users who need it, including access to the Financial Ombudsman Service; clear signposting to debt support; and debt collection practises consistent with industry standards.
5. Enable the FCA to consider setting a centralised cap on BNPL late fees to promote fair and consistent treatment across platforms.
6. To prevent vulnerable consumers from amassing unsustainable debt, ensure that proper affordability checks are in place, with appropriate information-sharing across BNPL firms and other credit providers.
7. Review whether BNPL products by large online retailers, such as Amazon or Apple, should be treated in the same way as products by third-party providers.
8. Improve awareness of DROs and seek ways to expand access to the scheme, recognising that around 3.7 million UK adults in debt are unaware they can seek help through a DRO.

Applicability: Federal; except B. (lines 5-7) and 8. (lines 71-73), which are England only.

­

Mover: 5 minutes; all other speakers: 3 minutes. For eligibility and procedure for speaking in this debate, see page 8 of the agenda. 

The deadline for amendments to this motion, see pages 10–11, and for requests for separate votes, see pages 7–8 of the agenda, is 09.00 Thursday 12 September. Those selected for debate will be printed in Conference Extra and Saturday’s Conference Daily.