In the last few years the Buy Now Pay Later (BNPL) market has exploded in popularity, with more than a quarter of the population now using the product. Many people have benefited from access to easy to use, interest free credit.

But because BNPL is unregulated, firms have been able to get away with unaffordable lending practices, promoting overspending and lack of clarity over the risks involved with the product.

We welcome the move to bring BNPL into line with existing consumer credit regulation to ensure that consumers are properly protected from harm.

We also support the government’s aim to regulate in a way that is proportionate, avoiding putting costs into the product lifecycle where possible, so that wider access to credit is maintained where this is consistent with consumer protection.

As set out in our response, to get the regulation right we want to see:

• Tackling unaffordable lending
• Customer journeys that help people make the right choice
• Better and more consistent treatment for customers in financial difficulty

We also want the government to ensure it has made a proper assessment of how BNPL is used by people from marginalised or financially excluded groups, who may find BNPL easier to access than other forms of credit, so that regulation is brought in in a way that preserves any identified benefits.

Overall, we strongly welcome this consultation and urge the government and the FCA to bring in regulation as quickly as possible.

With financial pressures from the pandemic and the growing cost of living crisis, it’s critical that consumers are protected from the risks of unaffordable debt posed by this unregulated market.