Retailer support for fully regulated Buy Now, Pay Later (BNPL) products could stop 876,000 Brits from debt, new research from Barclays and StepChange has found.

According to the study, the rising cost-of-living is having a direct impact on the popularity of BNPL products. More than a third of consumers said that the lending has become more appealing since inflation and energy costs went up.

The report shows that UK shoppers that use BNPL products are currently paying off an average of 4.8 purchases, up from 2.6 in February 2022.

The figures are published days after the government announced its plans for BNPL regulation.

Under the new rules, BNPL firms will be forced to carry out affordability checks to make sure the service is affordable to all consumers that opt to use it.

The government is also changing financial advertisement rules so that adverts are “fair, clear, and not misleading”.

But the new rules won’t be effective for some time, as the government will publish a consultation on draft legislation towards the end of the year.

The government plans to lay secondary legislation by mid-2023, after which the FCA will consult on its rules for the sector.

“Retailers are a vital gatekeeper in the lending process and it is crucial that they perform due diligence on the BNPL products they offer,” said Antony Stephen, chief executive, Barclays Partner Finance. “However tempting it may be to evaluate BNPL payments purely on their acceptance rates or merchant fees, they need to go further and look at how responsible the lending process is behind each transaction.”

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