Martin Lewis issues warning to anyone who uses buy now, pay later

Martin Lewis has issued a warning to anyone who uses buy now, pay later (BNPL).

The Financial Conduct Authority (FCA) has revealed there will be stricter affordability checks next year for people using BNPL providers. BNPL lets shoppers buy items on credit and pay for it later, usually spread out over several months, interest-free.

However, debt charities have warned that it can lead to some people taking out loans that they cannot afford. You can get charged late fees if you miss a BNPL payment and some firms also report missed payments to credit referencing agencies.

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Martin Lewis has praised the new regulation, but warned that the protections are not in place just yet. He said: “I was one of those who campaigned strongly to get buy now, pay later regulated.

“Not because it's wrong for everyone, but because we need to make sure it's safe. If you know what you're doing and you're using it to spread the cost over a few months interest-free – great. Too often, though, it was sold as a lifestyle choice. It isn't.

“It is a debt, and it needs to have the same protections as other debts. Now, today, we see the beginning of the process of regulating it, but the protections are not fully in place yet.

“For example, you won't be able to go to the Ombudsman if something goes wrong for at least a year. So if you're getting buy now, pay later at the moment, you should still be very careful.”

Under new proposals, BNPL providers will have to check that people can afford to repay their loans and offer support if they get into financial difficulty. Borrowers will also be able to complain to the Financial Ombudsman Service if something goes wrong.

The rules would come into effect when BNPL comes under FCA remit next year. According to FCA research, one in five (20%) UK adults – roughly 10.9 million people – used BNPL at least once in the 12 months to May 2024. This is up from 17% in 2022.

In May 2024, 2% of UK adults (1.1 million people) had £500 or more outstanding unregulated BNPL debt, and 11% of UK adults (5.3 million people) had £50 or more outstanding.

The FCA consultation is open for feedback until September 26, 2025, and the rules would come into force from July 15, 2026. Firms will have six months from the date the regime comes into force to apply for full authorisation.

Sarah Pritchard, deputy chief executive at the FCA, said: “We have long called for BNPL products to be brought into our remit, so people can benefit from BNPL while being protected.

“Our regulation will help consumers navigate their financial lives, with checks on whether they can afford to repay, support when things go wrong and access to the right information to make informed decisions.

“We’re mainly relying on existing requirements, including the Consumer Duty, rather than proposing to make lots of new rules, supporting growth and allowing firms to innovate.”