Buy Now Pay Later regulation looms, but there’s a long wait yet

Laura Suter
20 June 2022

Laura Suter, head of personal finance at AJ Bell, comments on the proposed regulation of Buy Now Pay Later:

“The current cost of living crisis is prime time for Buy Now Pay Later schemes to thrive, as more people are forced to turn to debt to make ends meet. It’s good news that the Government has finally taken action on the schemes, which have been allowed to operate outside of the normal rules for consumer debt. However, the cost of living crunch could be a distant memory by the time regulation actually comes into place, with the Government only planning to have rules defined by mid next year, at which point the FCA has to start its process. That means thousands more people will be caught out by Buy Now Pay Later before the Government crackdown on the industry begins.

“This move has been a long time coming, and parts of the industry have already pre-empted Government regulation in order to prepare for tighter rules – having seen the writing on the wall months ago. However, lots of the industry is still deliberately opaque about how the schemes work, the level of fees you’ll pay and how missing debt payments can impact your credit report.

“Buy Now Pay Later can be a useful alternative form of debt for some people, but only if you have a clear plan to repay it and understand the debt you’re taking on. Far too many people opt for it as a payment option after being incessantly targeted with it at the checkout and don’t realise the longer-term implications of missing a payment. What’s more, until these rules are finalised, firms haven’t had to check the financial situation of someone using BNPL, meaning they could be handing over more borrowing to someone already up to their eyeballs in debt.”

Laura Suter
Head of Personal Finance

Laura Suter is head of personal finance at AJ Bell. She is a multi-award winning former financial journalist, having specialised in investments. Laura joined AJ Bell from the Daily Telegraph, where she was investment editor. She has previously worked for adviser publications Money Marketing and Money Management, and has worked for an investment publication in New York. She has a degree in Journalism Studies from University of Sheffield.

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