Money Saving Expert Martin Lewis issues Christmas buy-now-pay-later warning ahead of new rules

New clampdown on buy now pay later won’t come into force until January 2026

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Millions of families across Britain were warned by Money Saving Expert ’s Martin Lewis of the risks of buy now pay later deals for Christmas despite new rules coming in to regulate the practice. He welcomed the new clampdown but stressed that it would not come into force until January 2026 after consultations and a review by the regulator. So, shoppers would not be protected this Christmas or next under consumer standards which exist already for other financial transactions.

The new rules will cover affordability and standard fairness practices and end the “completedly unregulated Wild West” at the moment, Mr Lewis added, of buy now pay later (BNPL). A free financial ombudsman may adjudicate in disputes between buyers and sellers. But Mr Lewis stressed: “It’s important to understand with Christmas coming up and people use buy now pay later a lot, this Christmas and frankly next Christmas you still won’t be regulated.



“So, be very wary before using buy now pay later at the moment. “It can work well for some. “But it is unregulated, you do not have the standard consumer protections and this thing called the consumer duty which basically means firms have to treat you fairly.

” The financial expert first raised the alarm when giving evidence to the Commons Treasury committee in 2020 about the “explosive” growth in buy now pay later, which even includes people using it to purchase takeaway meals, and leaves some individuals unable to repay their debts. He has urged Chancellor Rachel Reeves to address the problem. “I was delighted when the Chancellor called me yesterday to say ‘we are doing it’,” he told ITV’s Good Morning Britain.

He explained further: “Buy now pay later is very tempting. “What you have to ask yourself is what is going to change over the next three months that will enable me to not only live as I currently do, but also make repayments for all these different purchases. “What is going to change to enable it to be affordable “If the answer is nothing, then don’t do it.

.” As the festive season is approaching, he emphasised: “Getting yourself into debt for Christmas will leave with you a miserable New Year. “It’s one day, go and ask the Archbishop of Canterbury, he would be desperately upset to know that people were ruining their financial lives and threatening their well-being and being unable to sleep on the back of having spent more at Christmas than they needed to do so.

“Borrowing is not a solution to Christmas, it’s a problem for Christmas.” BNPL products allow people to spread the cost of purchases over time, but borrowers currently do not have access to some protections provided by other consumer credit products. The Government has launched a consultation on bringing buy now pay later companies under the supervision of the Financial Conduct Authority (FCA) and applying the Consumer Credit Act, to help ensure borrowers receive clear information, avoid unaffordable borrowing and have strong rights when issues arise.

Economic Secretary to the Treasury Tulip Siddiq said: “Our approach will give shoppers access to the key protections provided by other forms of credit while providing the sector with the certainty it needs to innovate and grow.” The new rules will allow the FCA to apply rules on affordability, meaning companies will be required to check that shoppers are able to afford repayments before offering a loan, to help prevent people building up unmanageable debt. Companies will also need to provide clear, simple and accessible information about loan agreements in advance so that shoppers can make fully informed decisions and understand the risks associated with late repayments.

Michael Saadat, international head of public policy at provider Clearpay said: “We have always called for fit-for-purpose regulation that prioritises customer protection, delivers much-needed innovation in consumer credit and that sets high industry standards across the board.”.