Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the impact of increasing living costs on the number of people using buy now pay later services.

HM Treasury regularly monitors changes in the consumer credit market, including the impact of economic developments, as part of its normal process of policy development.

However, it does not hold information regarding the impact of increasing living costs on the number of people using Buy-Now Pay-Later (BNPL), or the prevalence of the use of BNPL products to purchase essential items. Instead, HMT draws on the research of various stakeholders, including consumer groups and the wider financial services industry, to inform policy development.

The Woolard Review into the unsecured credit market found several potential risks of consumer detriment from interest-free BNPL products. The Government recognises those risks, but also notes that as an interest-free product, BNPL can often be lower-risk than other forms of borrowing and a useful tool to help consumers manage their finances. That is why on 2 February 2021, the Government announced its intention to regulate BNPL products in a proportionate manner.

The Government published a consultation on policy proposals for the regulation of BNPL on 21 October 2021, which closed on 6 January 2022. The Government is now reviewing responses to this consultation and considering next steps and intends to publish a consultation response in the spring.