It only arrived in the UK in 2014, but Buy Now Pay Later (BNPL) now accounts for 8% of all online and physical payments, according to UK Finance. It may have its flaws and its critics, but it’s been an undeniable success story.
Now it’s time for the next chapter of that story – the UK financial regulator, the Financial Conduct Authority (FCA) is bringing in new rules for BNPL providers, and they come into force on 15 July.
Research by Fair4All Finance earlier this year shows that around one in four UK adults uses BNPL, and says it is “widely agreed” that the new regulations will result in up to 30% of users being declined access in future.
If you’re a BNPL user and you’re wondering if the new regulations might impact you, take our short quiz. Or you can find out more about our affordable loans here.
At Fair for You, we hope this will prompt retailers to think about whether they offer the right flexibilities and payment options to ensure they serve as wide a customer base as possible.
After all, those customers losing access to BNPL won’t simply stop needing washing machines and school shoes. As those same UK Finance stats show, clothing and shoes, domestic electric equipment and non-electrical household goods are the three most common items bought with BNPL.
About Fair for You
As an ethical lender, we carry out careful affordability checks. Our purpose is to widen access to affordable credit responsibly rather than narrow it, offering structured, manageable repayments on exactly the kind of essential purchases BNPL is most used for. Since 2015, we’ve helped more than 100,000 customers to get in control of their finances, improve their health, and generated an estimated £750m in social value across the UK.
Our loans enable customers to spread the cost of essentials like fridge freezers, washing machines, mattresses and more. You can browse products from our retail partners on our website, and have them delivered to their door, paying back weekly, fortnightly, four-weekly or monthly. We also offer a Shopping Card loan, which can be used at retailers including Argos, Dunelm, Currys, Iceland, Trutex and more.
Our view on the new rules
As a company, we very much agree with the spirit of the rules. They have been created to put in vital protections for consumers, ensuring fewer fall into problem debt by instituting affordability checks and consistent standards.
Many of Fair for You’s customers love BNPL, and use it alongside Fair for You loans. Our loans and BNPL loans are different but can both help customers to manage their finances.
We’re doing some work surveying our audience on what it would mean to lose access to BNPL, and initial results show that a substantial proportion are worried at the prospect, saying it will make it harder to deal with financial shocks and day-to-day budgeting. This backs up what we’ve heard from our low-income, financially-excluded customers in the 11 years since we were set up.
It’s a tough job for the FCA. Something had to be done about BNPL, given certain bad practices in the sector. But it was always going to be very difficult to strike exactly the right balance between protecting consumers and cutting off a vital source of affordable credit.
This is particularly the case given how widely used it is - while it is used by slightly more women than men, it has a broad appeal across different age groups and income brackets, as those UK Finance stats show.
What we’re asking the retail sector
From the pandemic through to the current cost-of-living challenges, and for years before this, the retail sector has always been very responsive to the needs of communities across the UK.
And since Fair for You was set up in 2015, the sector has been fundamental to what we do. We’re so grateful to the retailers who have partnered with us. We’re also thankful to other retailers who have talked to us, learned more about what we do and how they can support customers on low incomes, even if it hasn’t resulted in us formally partnering.
Having worked with retailers for more than a decade, here are some questions we hope the sector will be asking itself:
Do you have a range of different and inclusive finance options which work for different customer groups, including those who have a regular, reliable income but might struggle with a large, up-front payment?
Do you make clear enough to customers that these different options are available, and the differences between them?
Do your finance providers support you in explaining how their products might suit your customers?
What else could you do to help low-income families afford key items? Perhaps you can make it easier for someone to reserve an item with a refundable deposit (or no deposit), or make it easier for people to know how much stock is left of a sale item - these measures would give someone breathing room while they get funds together for a larger purchase. Or could your loyalty schemes provide extra discounts on essential household items?
Fair for You might fit into that picture. Or it might not. Either way, we’re always keen to discuss the future of the consumer credit landscape with retailers.
If you’re looking for a way to spread the cost of essentials, you can find out more about the products you can buy with a Fair for You loan like washing machines, tumble dryers and fridge freezers.
If you’re worried about debt or budgeting, visit this page for plenty of tips, resources and links to places you can get help.
Fair for You loans are subject to eligibility and affordability checks. Missed payments may affect your credit file. Only borrow what you can afford to repay.