MPs: Bring ‘buy now pay later’ sector into line
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MPs: Bring ‘buy now, pay later’ sector into line – pressure on government amid concerns Christmas season could see thousands plunged into debt
- Vote on changes to the law on financial services and markets
- Labor front bench expected to support amendment tabled by Stella Creasy
- Some ministers personally agree that the issue needs to be addressed quickly
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MPs this week will step up pressure on the government to regulate the controversial Buy Now Pay Later (BNPL) industry amid fears that thousands of people could find themselves in debt over the Christmas period.
On Wednesday, they will vote on an amendment to the Financial Services and Markets Bill, which would require the BNPL regulation to be published within 28 days of it becoming law.
The Labor front bench is expected to support the amendment tabled by Labor MP Stella Creasy, while sources said several backbench Tory MPs are also expected to support the measure.
Weak fundamentals: Some ministers have privately accepted that the problem needs to be addressed quickly as charities warn BNPL’s popularity soars
Even some ministers have privately accepted that the issue needs to be addressed quickly as debt charities warn that BNPL’s popularity is skyrocketing due to cost-of-living tightness.
Creasy told the Mail that BNPL was now “mimicking” the payday loan industry in that it was trying to encourage consumers to “get into the habit” of using its services to make people dependent on credit and help people with financial problems. ‘exploit’.
She added that complexity had been “used as an excuse to do nothing” and that the government should at least bring BNPL, which is currently unregulated, into line with lender rules.
Tory MP Paul Maynard has also called for regulation of the sector. He said the ball was now in the Financial Conduct Authority’s court and that he was “urging acceleration” to bring the industry into line. Concerns about BNPL’s growing popularity come amid signs that UK household finances are coming under increasing strain as energy costs rise and inflation erodes.
BNPL allows customers to split the cost of purchases into installments, often with no interest or fees unless they fail to pay back on time.
Popularity boomed during the pandemic amid a surge in online shopping, leading to the growth of providers such as Klarna, Stripe and Zilch, while tech giants Apple and PayPal have launched their own versions of the services.
Recent figures from credit data group Clearscore showed that overdraft usage among UK bank account holders had increased by 7.1 percent since August last year, while spending on essentials increased by 25 percent.