Calls for greater data transparency as Treasury wraps us consultation into BNPL

Following the closing of the Treasury’s consultation into BNPL last night, Jayadeep Nair, Chief Product and Marketing Officer at Equifax UK, said: “The soaring popularity of Buy Now Pay Later (BNPL) services has fundamentally changed the UK retail landscape by increasing access to affordable credit at the point of sale. Our data suggests that 28% of UK consumers were actively making repayments on BNPL loans in October 2021, which is around 2.8 million more people than at the start of last year.

“With increased use comes increased scrutiny, and it’s wholly appropriate for the Treasury and FCA to now be weighing up the right level of regulation for what has become an extremely active and exciting part of the credit market.

“BNPL providers have a responsibility to ensure that their services do not have a negative impact on the financial wellbeing of the consumers that use them. For all the good that BNPL can do for those that can manage their day-to-day finances, there are concerns that some users may be slipping through the cracks. Our research suggests that 43% of BNPL users in the UK admit to having missed a repayment, and 9% say it happens often.

“To minimise that risk, we would like to see all BNPL firms share new and historic lending data with all the UK’s main credit reference agencies (CRAs) in a fair, clear and consistent way. Doing so will strengthen protection against overindebtedness, and help many people who use BNPL to get better deals on all kinds of credit. BNPL providers can share this data for the purposes of credit files today; they do not need to wait for any change to regulation.

“We have already engaged with a wide range of BNPL providers to help them deliver FCA-ready creditworthiness assessments and responsible debt collection services and we are committed to working with the Government, the FCA, BNPL providers, and consumer groups to ensure that consumers are fully aware of the implications of BNPL products on their credit standing.”