Regulation of the buy now pay later industry is “long overdue”, RSM UK risk assurance director, Zoe Morton, has argued.
Morton’s comments follow recent findings from RSM UK that, more than one in 10 millennials (13 per cent), and Gen Z (11 per cent) consumers plan to put Christmas on credit using buy now pay later apps.
In addition, previous data from RSM UK showed that 75 per cent of Gen Z, 70 per cent of millennials and 69 per cent of families are likely to use ‘buy now pay later’ options.
Buy now pay later app downloads continue to accelerate, with monthly active users rising to 11.1 per cent from 8.4 per cent last year.
Morton argued that, in this context, these apps should be regulated, stating “we’d urge providers not to wait, but to put measures in place as soon as possible to protect those most vulnerable customers from spiralling debt”.
“In the current cost of living crisis, relying on credit is a worrying habit for some shoppers and with Christmas approaching, this is the right thing to do, so why wait for the regulation?” she added.
With use of the currently unregulated payment services growing, RSM UK is urging payment service providers and retailers to put measures in place as soon as possible to protect vulnerable customers from debt
RSM UK partner and head of retail, Jacqui Baker, added: “We know that Gen Z, millennials and families are most likely to ‘buy now pay later’ to spread the cost as consumers navigate the impact of the cost-of-living.
“As it becomes a prominent payment tool for key spending, such as Christmas, retailers need to be aware of the proposed regulation to plan effectively as we could see consumers having more rights around areas such as returns for faulty goods.”
RSM also detailed that, under the new rules, the Financial Conduct Authority will be able to make customer affordability checks mandatory, and lenders will need to ensure clear and accessible information is provided.
This confirms that customers fully understand what they are signing up to ahead of any loan agreement.
Any financial promotions by unauthorised merchants will also need to be approved by an authorised firm.
tom.dunstan@ft.com
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