FCA sees 'significant increase' in buy now pay later usage
Industry watchdog the Financial Conduct Authority said on Tuesday that there has been "a significant increase" in the use of buy-now-pay-later options.
According to data from the FCA, 27% of British adults used BNPL at least once in the six months prior to January 2023, up from 17% it in the preceding 12 months in May 2022.
The research also found that frequent users of BNPL were more likely to be in financial difficulty. They are more than twice as likely to have a high-cost credit product, almost twice as likely to have increased the amount of debt on credit products over the last year, and more than four times as likely to have missed a payment of a bill or credit commitment in three of the last six months.
The FCA, although it has no regulatory oversight over BNPL options, used its powers under the Consumer Rights Act 2015 to secure further changes to "potentially unfair and unclear contract terms" for unregulated firms in the sector.
Sheldon Mills, the FCA's executive director of consumers and competition, said: "Our research shows a significant increase in the use of BNPL over the past year.
"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."
Reporting by Iain Gilbert at Sharecast.com