Research conducted by the 300-year-old bank suggests many consumers are unaware of the details surrounding BNPL products.
More than one in three (36 per cent) of ‘buy now pay later' (BNPL) users do not fully understand the consequences of missing repayments, according to new research, commissioned by Barclays.
The bank, which is no stranger to criticism for its own lending practices, receiving a £26m fine in 2020 owing to its poor treatment of more than 1.5 million struggling borrowers, has offered non-interest bearing BNPL products for a number of years through its partner finance division.
However, it says 'unregulated' BNPL is a growing risk. More than a quarter (27 per cent) of UK adults have used BNPL, according to the Barclays study, which was conducted by Opinium in October, but a number of trends point to a misunderstood market for such products among consumers.
More than one in three (36 per cent) also said they are using BNPL to spend more than they can afford and 35 per cent expect to use BNPL more often as the cost of living increases. A quarter also said this has caused them to miss a repayment.
Of those who have used BNPL previously, almost half (46 per cent) say they are likely to do their Christmas shopping using BNPL
Antony Stephen, CEO of Barclays Partner Finance, which has interest-free and interest-bearing lending deals with the likes of Apple among other large companies says the research shows that more must be done to educate consumers using unregulated ‘buy now pay later’ products.
“Too many people are taking out these loans without realising the impact it could have on their finances and with festive shopping in full swing, it’s important shoppers don’t run the risk of signing up to agreements, which they may struggle to repay affordably in future.
“To protect consumers against taking on more debt than they can comfortably afford to repay, and to ensure minimum standards exist across the sector, we believe regulation should ensure all BNPL providers are required to undertake appropriate affordability assessments, consistent with those in place for other regulated consumer credit products.”