Commons Sense

House of Commons · Westminster Hall

Black Friday: Financial Products

23 November 2021 · 6 other contributors · 14,520 words

Opened by Stella Creasy Labour (Co-op) Walthamstow

Responding minister: John Glen

EconomyTaxationEmployment

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Stella Creasy raised concerns about black friday: financial products in Westminster Hall. A government minister responded.

Key points

  • Concerns raised about the risks associated with buy now, pay later financial products due to high household debt and late fees.
  • Experian data indicates that 40% of people would struggle to afford an extra 50 a month on rent or mortgage.
  • The MP requests urgent regulation of buy now, pay later companies and clear warnings to consumers about the risks involved.

Key requests to Government

The MP asks the Minister to commit to urgent regulation of buy now, pay later companies and provide clear warnings to consumers about the risks involved with using these products. She also wants the Government to ensure that retailers do not make it too easy for customers to sign up for unregulated credit options. I urge the Minister not to falter in regulating this industry quickly. I also ask that the Government use its education channels to warn people about the risks associated with unregulated credit products and advise them to proceed with caution during Black Friday deals.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Stella Creasy Labour (Co-op) Walthamstow

The MP is concerned about the high level of household debt in the UK and the risks associated with buy now, pay later financial products. She notes that many people are using these products to manage their finances during difficult times but often end up getting into more debt due to late fees and unaffordable repayment plans. Experian data shows 40% of people would struggle to afford an extra £50 a month on rent or mortgage, while StepChange reports that over 2 million people are in persistent credit card debt. The MP worries about the lack of regulation for these products compared to other forms of credit, such as payday loans. I am concerned about the predatory nature of buy now, pay later companies such as Klarna and Clearpay, which are preying on constituents. There are 4,000 Clearpay customers in my constituency alone, and I fear for their financial well-being. The regulation process is too slow compared to how quickly these companies are evolving and impacting consumers negatively. The lack of a financial ombudsman leaves consumers unprotected when using buy now, pay later services.

Other contributors (6)
  • Catherine West Lab Co-op Hornsey and Wood Green

    Thanked Stella Creasy for her work on holding loan sharks accountable, noting that Citizens Advice found 40% of buy now, pay later customers have been unable to pay essential bills. Raised concerns about the current economic situation making it difficult for people to manage debt. The MP notes that debt has become worse during the pandemic, with many people falling into arrears on utilities, council tax, and rent. She warns about the rise of buy now, pay later schemes which can lead to financial distress for those who cannot afford repayments.

  • Claire Hanna SDLP Belfast South and Mid Down

    Claire Hanna highlighted the exploitation of consumers through Black Friday financing, noting that it encourages unsustainable purchasing habits. She cited research indicating that 99% of Black Friday deals were available at lower prices elsewhere. The MP also pointed out that buy now, pay later services are particularly harmful to younger generations and contribute to environmental issues such as fast fashion waste.

  • Pat McFadden Lab Wolverhampton South East

    The market for buy now, pay later products is growing rapidly, with usage tripling last year and more than one in ten consumers paying for goods this way. This form of debt has risks for financially vulnerable individuals who may fall between different government support schemes during the pandemic, leading to increased debt and financial pressure.

  • Patricia Gibson SNP North Ayrshire and Arran

    She highlighted the growing debt from 'buy now, pay later' deals during Christmas shopping season, noting that shoppers have accumulated over £4 billion in outstanding debt this year. She stressed the need for proper regulation of these credit options to protect consumers, as many do not see them as traditional forms of credit and do not consider their arrangements carefully enough.

  • Paul Maynard Con Blackpool North and Cleveleys

    Welcomed the Government's decision to regulate the buy now, pay later sector through the Financial Conduct Authority but was concerned that the consultation fails to capture the true nature of consumer detriment. Stressed the importance of improving access to low-cost, short-term credit for financially vulnerable individuals and highlighted how high-value goods are increasingly being purchased via BNPL services. Emphasized the need for retailers to be held accountable as they benefit from this market model and called for faster progress on open banking. Advocated for no-interest loans to help families replace white goods without falling into debt.

  • Tulip Siddiq Lab Co-op Hampstead and Kilburn

    Congratulated Stella Creasy on her work, highlighting that 39% of online buy now, pay later customers did not realise they were signing up for a high-interest loan. Called for transparency in financial products to protect consumers. The MP agrees with concerns raised by Stella Creasy about buy now, pay later products and highlights the importance of fair access to credit for consumers. She emphasizes that many people are using these schemes to cope financially but end up struggling.

Government Response

John Glen

The Minister acknowledged the potential risks associated with unregulated buy now, pay later products and outlined existing protections. He highlighted that the number of transactions using these products tripled in 2020 but noted they make up only 2% to 3% of the consumer credit market. The Government has published a consultation document setting out proposed regulations, which includes expanding evidence about risks to consumers, engaging with industry representatives and consumer groups, and designing regulation that balances consumer protections without limiting availability and cost of useful financial products. Additionally, the Minister discussed ongoing efforts to tackle personal debt broadly, including maintaining record levels of funding for free debt advice and launching a breathing space scheme.

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