Buy Now Pay Later risks you need to be aware of

The buy now, pay later market, as of right now, is currently unregulated which means there are now official guidelines or rules that buy now, pay later companies need to adhere to.It is worth noting that some buy now, pay later lenders do sometimes offer longer-term credit agreements and these fall under current financial regulations and come with interest and fees just like regular personal loans and overdrafts.The UK Government is currently working on plans to introduce regulations which look set to come into play in the next two years.As part of the government’s regulation of the industry, buy now, pay later lenders will need to be approved by the Financial Conduct Authority (FCA) to be able to operate in the UK.Customers will also be able to complain to the Financial Ombudsman Service if they are unhappy with the way a buy now, pay later firm has treated them. Currently, customers can only complain directly to the firm.Mr Barrow said: ‘When the changes come into force lenders will be required to ensure that loans are affordable and rules will be amended to make certain that advertisements are fair, clear, and not misleading.’This news is encouraging but long overdue. We, and many others, have been calling for this for a long time and whilst it’s positive that the government has finally listened to these calls, it could be too little, too late.’The Woolard Review, published in early 2021 concluded that this regulation needed to be fast-tracked to match the rise in buy now, pay later growth.’READ MORE: The areas that pay the most council tax in the UK – is yours in the top 10?