Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps his Department is taking to regulate buy now, pay later products.

The Woolard Review into the unsecured credit market found several potential risks of consumer detriment from interest-free Buy-Now Pay-Later (BNPL) products. The Government recognises those risks, but also notes that as an interest-free product, BNPL can often be lower-risk than other forms of borrowing and a useful tool to help consumers manage their finances. That is why on 2 February 2021 the Government announced its intention to regulate BNPL products in a proportionate manner.

The Government published a consultation on policy proposals for the regulation of BNPL on 21 October 2021, which closed on 6 January. The consultation sought stakeholder views on how to define the scope of regulation and how to draw boundaries in legislation between different types of credit agreements that make use of the exemption from consumer credit regulation that is currently used by BNPL products.

The Government is now reviewing responses to this consultation and considering next steps and intends to publish a consultation response in the spring.

HMT does not hold information regarding the savings to consumers resulting from the use of BNPL products in 2021, or the impact of BNPL on the UK’s retail industry. Instead, HMT draws on the research of various stakeholders, including consumer groups and the wider financial services industry, to inform policy development.