With record-high inflation and a UK recession looming, the current economic climate will undoubtedly worsen over the coming months. As cash and disposable income become tighter, we can expect to see more people turn to non-bank loans as a means of alternative finance, with Buy Now, Pay Later (BNPL) models anticipated to feature prominently.
Unlike other traditional methods of lending, BNPL is still unregulated by the FCA as of 2022, meaning consumers lack protection from the Consumer Credit Act and access to relevant Ombudsman support. Arguably, BNPL has made it easier to create problem debt, with research showing that a third of UK BNPL users are unable to manage payments under their plan. Although the UK is likely to be at the forefront of new regulations being recommended by the FCA, not until mid-2023, it’s looking like it will be too late to address the financial problems consumers face today. It’s clear more can be done to warn of the revolving door of debt associated with BNPL.
Beware of the pitfalls
BNPL skyrocketed in popularity due to its convenience, lack of interest…