MONEY Saving Expert’s urgent plea to online shoppers using ‘buy now pay later’ schemes as services like Klarna, Clearpay and Laybuy have surged in popularity over recent years.
Money Saving Expert founder Martin Lewis says that these services, which allow shoppers to make multiple monthly payments for products online, may seem great on the surface but there could be a lot more at risk.
The financial guru speaking on his BBC Radio podcast ‘Ask Martin Lewis’ said: “There is a regulation that was originally set up so if you’re a gym or if you’re a furniture shop you can offer zero per cent credit for a year and you don’t have to be regulated.
“But what’s happened over the past few years is firms have sprung up that tend to come from highly regulated countries and have moved into the UK where effectively they are unregulated for this buy now, pay later activity.
“We’ve seen it explode over this year…and you’re always offered these buy now pay later options from retailers, sometimes people aren’t even aware they are opting for buy now pay later.
“And it’s something I’m getting increasingly concerned about.”
He warns that the lack of regulations could create an ‘explosive’ form of credit that could prove disastrous if things go financially wrong.
Martin added: “My big issue is this, this is an explosive form of credit that is becoming very quickly dominant and it’s not regulated.
“That means it’s not controlled properly and more importantly when things go wrong you don’t have a right to go to a financial ombudsman so I think I would put a warning out there.
“Think carefully, make sure you understand what you’re doing when you buy now pay later.
“Make sure you understand it’s credit, it’s a form of debt- make sure you know the rules or don’t touch it.”
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