‘Buy now, pay later' firms see 36% jump in complaints

Consumers increased complaints to the Financial Ombudsman Service in the UK by 36 per cent in 2022, according to data from a  Freedom of Information request.

BNPL has been the fastest growing part of the lending market in many countries in the past few years prompted partly by the pandemic ecommerce boom.  A flood of investment into the space by banks, venture capital and credit investors as fuelled the soaring demand. 

However, despite consumers' appetite, an increasing number appear unhappy with BNPL providers. 

The Financial Ombudsman Service, which currently has no official BNPL mandate, received 220 complaints against BNPL firms last year - up from 162 in 2020.

“Rising complaints against BNPL firms indicate the desperate need for strong regulation across the sector. However, given it has taken two years to reach this point, we’re unlikely to see the much-needed consumer protections appear anytime soon,”  said Neil Kadagathur (pictured), co-founder and CEO of Creditspring, which submitted the FOI. 

“Household budgets are set to take a further hit over the next few months with another wave of increased costs from rising water bills to council tax hikes. This will inevitably lead to an even greater reliance on credit products – with BNPL likely to grow in popularity. Borrowers need protection and support now, not in several months or even years’ time when regulation finally kicks in,” he said.

The rise in complaints comes at a time of a proposal for new regulation of the BNPL sector from the Treasury. The Financial Conduct Authority will be handed powers to regulate the industry with the Financial Ombudsman Service set to oversee complaints against providers.