15 million people likely to use unregulated Buy Now Pay Later to help ease seasonal spending

New research by Citizens Advice finds more than one in four UK adults say they’re likely to use Buy Now Pay Later (BNPL) to help with festive spending.

This rises to 56% of parents with primary school-aged children.

The findings come as the charity reveals those unable to cover the costs of their essentials – like groceries and bills – are more likely to have been a regular user of BNPL in the last 12 months.

In the context of the ongoing cost-of-living crisis, the charity’s analysis found 11% of BNPL users used the product to pay for groceries. This figure jumps to 35% for people who regularly use BNPL.

The government committed to regulating BNPL in 2021 as a matter of priority, but work has stalled. Citizens Advice warns these continued delays are putting consumers – many already facing tough financial situations – at risk of being exposed to unmanageable levels of debt and even bailiff action.

This is because BNPL lending does not require any affordability checks, unlike other credit options.

The charity’s concerns are reflected in its new research:

One in five (21%) BNPL users have missed or made a late BNPL payment in the last twelve months, with one in ten (10%) of those visited by an enforcement agency or bailiff as a result

Almost a third (29%) of BNPL users who were due to make a payment in the last month borrowed money to repay their instalments, meaning their initial debt is only leading to more debt

This worrying trend is mirrored in what the charity’s advisers are seeing on the ground: there’s been a 67% increase in people seeking help from Citizens Advice with BNPL debt in the last 12 months.

With the use of BNPL only continuing to grow, Citizens Advice is calling on the government to bring forward regulation of the BNPL sector. Despite the government carrying out a full consultation, and actually drafting laws, the sector remains unregulated.

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“The number of people turning to Buy Now Pay Later, and falling into debt as a result, underlines the urgent need for regulation. With so many households already on the financial ropes, BNPL borrowing for extra Christmas costs risks delivering the knockout blow.

“This should set off alarm bells for the government, whose dithering on regulation of the sector has gone on for too long. As the use of this form of credit soars, the impact of its lack of regulation becomes impossible to ignore.

“Consumers are being failed and as a result could see a 2024 plagued with unmanageable debt, poor credit, and bailiffs knocking at their door. The government must act on its almost three-year-old pledge and bring the BNPL market into line urgently.”