Martin Lewis is urging people to remain cautious of ‘buy now, pay later’ schemes following the Government’s move to impose stricter rules. Sites such as Klarna and Clearpay will be forced to run affordability checks and more clearly outline the risks of debt once legislation introduced in Parliament earlier this week becomes law.
This updated regulation is expected to be enforced by the Financial Conduct Authority (FCA) by mid-2026 following years of campaigning from financial experts. The changes to the Consumer Credit Act could also protect purchases between £100-£30k if anything goes wrong, with both retailers and loan sites held liable.
This is similar to current credit card rules and applies to items that are faulty or missing, and companies that go bust. Shoppers will also be given powers to complain to the independent Financial Ombudsman Service for the first time, making it easier to get a refund if entitled to one.
It’s hoped the reform will allow the estimated 10 million buy now, pay later (BNPL) users in the UK to make fully informed decision decisions. However, Martin Lewis has issued a warning to people ruining their ‘financial life’ now and once the law changes take force, as many don’t realise they are going into debt.
He said: “BNPL can be useful, allowing those who need to spread payments for a budgeted, necessary purchase, such as a plumber, to do it interest-free. Yet it’s been sold as a lifestyle choice, not a debt, and pushed for instinct buys or even takeaways. Too many are in trouble with multiple BNPL repayments, leading to debt-chasing and credit file damage.”
“Regulation will mean firms must be overt that it’s a debt, have proper affordability rules, and will crucially let people go to the Financial Ombudsman Service if things go wrong. Yet it’s not coming in until 2026, so people should still maintain a level of wariness until then.”
Around 22 per cent of BNPL users missed one or more repayments between June 2023 and December 2023, according to research from the FCA. More than a quarter of these people were contacted by a debt collection agency or negatively impacted their credit card score as a result.
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