Yahoo News Buy now, pay later is next scandal waiting to happen, says MP
Ms Creasy is calling on retailers such as Boohoo to remove the lender schemes from their websites
(AFP via Getty Images)An MP is calling on fashion retailers such as Boohoo and Missguided to temporarily halt buy now pay later (BNPL) schemes amid concerns that young people are racking up debt.
Labour’s Stella Creasy has urged ministers to regulate BNPL lenders such as Klarna and Clearpay, warning of a “financial scandal waiting to happen”.
StepChange Debt Charity warns that many more people are seeking help for such debts.
The Government last week voted down Ms Creasy’s cross-party amendment to the Financial Services Bill which would introduce regulations within months.
Ministers have indicated they will take action but only after a review of unsecured credit market regulation is published.
Ms Creasy is calling on retailers to remove the lender schemes from their websites. The websites of both Boohoo and Missguided advertise their BNPL schemes next to the item you are considering buying.
Ms Creasy said: “My message to all retailers is I’m going to hold them responsible until the Government gets itself in order and gets the regulation in place.
“I am very concerned by any websites which prioritise BNPL. I’m very concerned by any companies that actually offer discounts to push people onto using BNPL.
"I want to see responsible retailers step in where the Government has failed. It is a ticking time bomb particularly of younger consumers.”
Research from Comparethemarket.com shows BNPL schemes are being used 35 per cent more often now than before the pandemic.
Klarna said it charges no interest and no fees on its “most popular products”.
Boohoo said: “For many people who use BNPL, this method of payment helps them to manage their money.”
A spokesman for Clearpay said: “We support fit-for-purpose regulation that protects consumers, but also acknowledges their desire for flexibility when it comes to making payments.”
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