Martin Lewis is calling for better protection for Brits using buy now pay later (BNPL) schemes online. The MoneySavingExpert (MSE) founder has vented concerns over a lack of control and regulation, and is urging the government not to scrap legislation.
Laws, which have been long planned but are yet to be introduced, now appear to be on the brink of being binned according to Lewis' MSE site. The legislation was hoped to protect consumers using BNPL schemes, as some users can end up sliding into a dangerous cycle of debt to keep up with spending.
Citizens Advice (CA), MSE and Which? have all long called for better regulation of BNPL schemes due to its explosive growth. CA research found that 37 per cent of UK adults have used BNPL in the last 12 months.
Meanwhile, one in six people using BNPL are behind on payments, and that figure rises to over one in three for those on Universal Credit, according to Citizens Advice. Because of this, various BNPL schemes are coming under scrutiny with experts claiming they cannot continue in their current state.
Writing on his award winning site, Lewis said: "The Government hasn't said it's doing a U-turn, but it's hard not to hear the screech of the handbrakes and the yank of the steering wheel. I desperately hope the Government won't be yankers though, this regulation is needed, and needed soon."
Though Lewis admits BNPL can be a "decent" way to spread the cost of planned purchases, too often people sign up without realising it is debt. He explains: "Regulation was so close we could taste it...Yet now we're facing another Christmas, amidst a cost of living crisis, when people under financial pressure are tempted to borrow, and to spend, by this ubiquitous form of debt-payment."
Though the industry does recognise credit laws are "imperfect", Lewis says: "They're imperfect for all other debts too – but they're far better than nothing. And BNPL is a debt – it needs controls and regulation. Crucially, that'd ensure it's promoted correctly, and would give people a legal right to go to the Ombudsman when it goes wrong."