Credit Reference Agencies

(asked on 9th November 2023) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate he has made of the number and proportion of buy now pay later providers who voluntarily report their customers’ (a) borrowing and (b) repayment records to credit reference agencies.


Answered by
Bim Afolami Portrait
Bim Afolami
Economic Secretary (HM Treasury)
This question was answered on 16th November 2023

HM Treasury regularly monitors the consumer credit market as part of its normal process of policy development.

Buy-Now Pay-Later (BNPL) is an interest-free product which gives consumers a time-limited means of spreading payments for their purchases. When used responsibly and provided affordably it can be a helpful way for consumers to manage their finances and make purchases.

Many consumers are attracted to BNPL because of its interest-free nature, which the Government considers makes it inherently lower risk than most other types of credit. The FCA’s most recent Financial Lives survey found that 46% of people of who had used BNPL in the past 12 months chose it because it was interest-free. In addition, the survey found that 88% of users found it easy to keep track of their repayments.

As such, BNPL represents a popular alternative to traditional, interest-bearing forms of credit like credit cards and personal loans. For some financially vulnerable consumers it may also provide an alternative to high-cost and illegal lending. Further data from the FCA shows that around 14 million adults used BNPL in the six months to January 2023 and that the average outstanding BNPL balance is low at £236.

While the department does not hold precise information on the number and proportion of BNPL firms reporting borrowing and repayment records for their customers’ agreements to credit reference agencies, it understands that several of the UK’s major BNPL firms have reporting arrangements in place with at least one credit reference agency.

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