Caroline Siarkiewicz, Chief Executive of the Money and Pensions Service said:
“Research from our Debt Need Survey, which measures how many people need debt advice in the UK, has shown that four in ten people (38%) who had used Buy Now, Pay Later (BNPL) products in the last six months are in need of full debt advice. A further third (35%) are at risk of falling into problem debt, and only a quarter (27%) of those demonstrated that BNPL is appropriate in line with their financial commitments.
“This is worrying because it indicates that some of the most vulnerable are using BNPL, which is unlikely to be in their best interests if they are already in problem debt or likely to fall into it. Therefore, we welcome the drive to regulate BNPL products to bring these under greater scrutiny and affordability checks.
“We know many people currently feel worried about money, and some people may turn to credit products like BNPL to help them pay for everyday essentials such as food. In general, we urge anyone who is thinking about using BNPL to consider this type of borrowing very carefully and fully understand what they are committing to. If possible, people should look at alternative options first, such as using a credit union, which provides affordable ways to borrow.
“As the organisation behind the annual Talk Money Week campaign, we also want to encourage people to have conversations about money year-round – particularly people using credit regularly – so they can get the support they need to find a way forward.
“If anyone is worried about keeping up with payments, we encourage them to talk to their creditors as early as possible, as they could offer affordable options to pay back what is owed. Our guide talking to creditors is designed to help people find out more about how to do that well. For those who are currently struggling to keep on top of bills and financial commitments and are considering or already using BNPL, we suggest seeking free debt advice immediately. The Debt Advice Locator Tool on the MoneyHelper website can help you find a suitable debt adviser.”
You can also find out more about BNPL in our guide and what to do if you get behind with BNPL payments
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About the Money and Pensions Service
The Money and Pensions Service (MaPS) is here to ensure every person feels more in control of their finances throughout their lives: from pocket money to pensions. When they are, communities are healthier, businesses are more prosperous, the economy benefits, and individuals feel better off. MaPS delivers free and impartial money and pensions guidance to the public through MoneyHelper, which recently brought together legacy services the Money Advice Service, The Pensions Advisory Service and Pension Wise.
MaPS is working to make sure the whole of the UK understands that financial, physical and mental health are all deeply connected. MaPS’ role is to connect organisations with the shared purpose of achieving the five goals set out in the UK Strategy for Financial Wellbeing.
MaPS supports innovation so that everyone can use the most effective methods to help people feel more in control of their money, targeted to those most in need and inclusive of people from all backgrounds. MaPS is an arm’s-length body sponsored by the Department for Work and Pensions (DWP).
For further information visit the Money and Pensions Service website: www.maps.org.uk The public can get free guidance about their money and pensions: www.moneyhelper.org.uk / 0800 138 7777.