Standing up for consumers

For many people, Buy Now Pay Later is a useful and convenient solution, offering them flexibility with their purchases. But consumers need stronger protections.

The use of BNPL has increased exponentially which means that more and more people could find themselves at risk if things go wrong. More than one in three adults use BNPL. And in the first quarter of 2024, more than £1 in every £7 spent online was through a BNPL product.

But during the cost-of-living crisis, more and more people are facing financial problems because there are no rules or protections with BNPL. In May 2024, Citizens Advice saw two times more cases than in May of 2023, or seven times more compared to three years ago.

Despite being the fastest growing type of personal debt, BNPL remains completely unregulated. BNPL companies often don’t make it clear to people that they are taking on debt. And they are not required to check if you can afford the debt you’re taking on. If you can’t afford your BNPL debt, you can’t go to the Financial Ombudsman Service for help.

This means that people don’t get vital protections that are available with other forms of debt (e.g. credit cards). And BNPL companies don’t need to follow the same rules as other lenders.

Martin Lewis, Citizens Advice, Which? and many other campaigners have called for regulation of BNPL.

Our new policy passed today calls on the Government to take a sensible and balanced approach, making sure that BNPL is regulated like all other forms of lending, so that people are protected and can enjoy the flexibility it offers in a safe and sustainable way:

• Stopping BNPL firms from engaging in harmful or misleading advertising
• Bringing BNPL under ‘consumer duty’ rules for financial products, which require that key terms & conditions are clearly set out
• Requiring that fair and consistent support is available to all BNPL users who need it
• Looking into setting a centralised cap on BNPL late fees to promote fair and consistent treatment across platforms.
• Ensuring that proper affordability checks are in place, with appropriate information-sharing across BNPL firms and other credit providers.
• Reviewing 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.

The previous Conservative Government had promised to introduce protections but they didn’t keep their word. In opposition, Labour called for regulation but measures weren’t included in the King’s speech and while they’ve indicated they’ll take action, they haven’t said when they’ll bring in any new protections.

Liberal Democrats are leading the way in giving consumers the protection they need.