Sheldon Mills / FCA
More than a quarter of Brits now using BNPL says FCA
Heavy users of BNPL are more likely to have high-cost credit products and miss payments
Data from the Financial Conduct Authority (FCA) indicates a sharp rise in usage of buy now, pay later (BNPL) services in the UK.
Around 27 per cent of UK adults reported using BNPL in the six months to January 2023, a significant increase on the 17 per cent from May 2022.
Furthermore, the FCA’s Financial Lives research revealed that regular BNPL users are at greater risk of financial difficulty, with heavy users (those using BNPL more than 10 times in the last year) twice as likely to hold high-cost credit products.
Heavy users are also four times as likely to have missed payment of a bill or credit commitment in three of the last six months, and almost twice as likely to have increased the amount of debt on credit products over the last year.
“Our research shows a significant increase in the use of BNPL over the past year,” Sheldon Mills, executive director of consumers and competition at the FCA, said.
“When used appropriately, the product provides valuable benefits, but we want to ensure that consumers, particularly those in vulnerable circumstances, have adequate protections and are given sufficient information.”
Despite BNPL being outside its regulatory oversight, the FCA continues to use the Consumer Rights Act 2015 to rectify potentially unfair and unclear contract terms in the sector, similar to how it got Klarna, Clearpay, Laybuy and Openpay to rewrite their terms and conditions in 2022.
Today both PayPal and QVC are also voluntarily simplifying their BNPL terms because of the FCA’s concerns of consumer harm, with PayPal specifically clarifying what happens when a consumer cancels a purchase financed by a loan.