Buy Now Pay Later

Buy Now Pay Later – Complain After?

This week saw the FCA’s final rules on “Buy Now Pay Later” products come into effect.  Amidst increasing media scrutiny on services like Klarna and Clearpay, the rules which were confirmed back in June,  are expected to save consumers at least £40 million a year, and potentially as much as £60 million.

As of November 12th, Buy Now Pay Later providers are prohibited from backdating interest charges on paid amounts, and they are required to alert their customers as to when 0% interest periods are about to expire. The new rules also require retailers who offer Buy Now Pay Later options to present the option in a clear and balanced manner, providing information on the costs and potential negative consequences.

This tackles one of the major concerns around the increasingly popular BNPL offering – up until now many providers would give customers 12 months at 0% interest with no requirement to make payments, but then backdate the interest across that period if the costs were not covered in full, with some consumers complaining that they were not made aware that these periods were ending and that they were not properly informed of how the interest would be charged.

A recent survey by PayPlan suggested that over 70% of people in the UK with debt problems said that retailers BNPL programmes had made their money issues worse, and some BNPL providers have also been criticised for not making clear the possible effects on their customers’ credit scores. I will be interested to see if we see an immediate shift in how Buy Now Pay Later options are marketed and presented, now that they’re under so much scrutiny. On the other side of the fence, it will be interesting to see if there is a sudden surge in complaints relating to historical practices, if so this could be a huge source of new complaints activity across the next year, especially as there currently seems to be no sign of the popularity of Buy Now Pay Later decreasing.

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