As Christmas draws near, Martin Lewis has issued a warning to UK families about the risks associated with ‘buy now pay later’ (BNPL) schemes. While welcoming incoming regulations aimed at controlling the practice, the MoneySavingExpert founder noted that these won’t come into force until January 2026.
Consequently, consumers will remain unprotected by the consumer standards that apply to other financial transactions for not just this festive season but also the next. The upcoming regulations are designed to ensure affordability checks and standard fairness, ending what Martin describes as the “completely unregulated Wild West” of current BNPL offerings.
Although a free financial ombudsman service could help resolve disputes between buyers and sellers, the finance expert cautioned: “It’s important to understand with Christmas coming up and people use buy now pay later a lot, this Christmas and frankly next Christmas you still won’t be regulated.
“So, be very wary before using buy now pay later at the moment. It can work well for some. But it is unregulated, you do not have the standard consumer protections and this thing called the consumer duty which basically means firms have to treat you fairly.”
Martin raised concerns while giving evidence to the Commons Treasury committee in 2020 about the “explosive” growth of Buy Now Pay Later (BNPL) schemes, which have seen people using them for everyday items like takeaway meals, leading to some being unable to repay their debts, as reported by the Evening Standard. He urged Chancellor Rachel Reeves to address the issue.
He expressed his delight on Good Morning Britain: “I was over the moon when the Chancellor rang me yesterday to say ‘we are doing it’.
“Buy now pay later is very tempting. You have to question what will change in the next three months that will allow me to maintain my current lifestyle, but also make repayments for all these different purchases. What will change to make it affordable? If the answer is nothing, then don’t do it.”, reports the Mirror.
And with Christmas only a few weeks away, he stressed:: “Plunging yourself into debt for Christmas will result in a miserable New Year. It’s one day, ask the Archbishop of Canterbury, he would be heartbroken to know that people were jeopardising their financial stability and risking their well-being and sleepless nights because they overspent at Christmas.”
Companies will also need to provide clear, simple and accessible information about loan agreements beforehand so that consumers can make fully informed decisions and understand the risks associated with late repayments. Michael Saadat, international head of public policy at provider Clearpay stated: “We have always advocated for appropriate regulation that prioritises customer protection, fosters much-needed innovation in consumer credit and sets high industry standards across the board.”