Call for more buy now, pay later credit data sharing as Treasury consultation closes

Last night the UK Treasury closed its buy now, pay later consultation, the next step in what will likely be a long journey towards increasing regulation around pay later products in the UK.

The consultation was part of the government’s plan to bring buy now, pay later under the oversight of the FCA, which will be launching its own consultation later this year once the Treasury publishes its decision on which regulatory controls should be applied.

​​Last night one of the big three pay later providers, Clearpay, said it welcomed “proportionate consumer protection” and also called on the government to “incentivise” the reporting of pay later payments on consumers credit files.

Credit bureau Equifax found that 28 per cent of UK consumers were making buy now, pay later repayments in October 2021, a figure that is only likely to increase.

Equifax UK’s chief product and marketing officer Jayadeep Nair said the company would like to see: “all BNPL firms share new and historic lending data with all the UK’s main credit reference agencies (CRAs) in a fair, clear and consistent way.”

Some are already doing this like NewDay, and newer pay later products like Monzo Flex and Curve Flex are proudly using and sharing credit data with the bureaus, but most don’t.

Consumer group Which? this week published the results of interviews with 30 buy now, pay later users that showed that many were mistaking these credit products as a “money management tool” as opposed to borrowing money.

“‘It allows payments to be spread out for budgeting. It made things possible which in one go would have been extremely difficult and I would have probably had to borrow money from elsewhere,” one said.

Another explained the experience of using buy now, pay later “doesn’t feel like you’re committing to a credit agreement.”

While Which? called for “no delay” in implementing stronger safeguards for consumers, echoing the government’s own comments that it was “acting swiftly”, change is unlikely to happen anytime soon.

Given the timelines of publishing the Treasury’s consultation response and the subsequent FCA consultation, it’s thought that further regulation won’t come into effect until late 2022, or even 2023.