Minister warns over a ‘computer says no’ stance to buy now, pay later schemes
A Treasury minister, Baroness Vere of Norbiton, has fired a warning over a "computer says no" approach towards 'buy now, pay later' plans amidst calls to regulate the industry.
She argued that many people use this method to purchase goods "very successfully", highlighting the need for any rules to be balanced and fitting. Expressing her support, the Tory frontbencher said that spreading costs in interest-free instalments is "incredibly helpful to people", and outstanding balances are usually "relatively small".
Despite these comments, there are increasing concerns that consumers could fall into debt and accrue late repayment charges, impacting their credit score. The government is currently considering feedback on how to regulate 'buy now, pay later' schemes.
Lady Vere expressed: "In many cases, when provided affordably and used responsibly, interest-free credit can be incredibly helpful to people trying to balance certain payments from month to month." She added: "The average outstanding balance of buy now, pay later is £236."
She added: "These are relatively small amounts of money that can be shifted from month to month, and it is proving incredibly useful to a number of people." Meanwhile, Green Party member Baroness Bennett of Manor Castle pointed out research showing almost a quarter of users had incurred late payment fees, which rockets up to 34% among younger customers.
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She said: "Is this not just one more way of laying a huge weight of debt on our young people?" In response, Lady Vere stated: "I do not believe so, because, as I said, it is not a huge amount of debt." She explained that: "The average balance for younger people aged 25 to 34 is just £185."
Lady Vere added: "One experience that I think many users have of buy now, pay later is that they may, once, have a late fee I know that my children certainly have and then they learn, and they do not do it again." According to her, "Those fees are not particularly expensive, but Experian, for example, would say that 99% of agreements were settled on time in January and February."
She emphasized how we cannot shut off access to a form of interest-free credit which has saved consumers over £100 million. "We cannot shut off access to a form of interest-free credit which has saved consumers more than £100 million. It is really important that we get the balance right." she insisted.
Tory ex-cabinet minister John Gummer, now known as Lord Deben in the Lords, voiced his concerns: "Does the minister accept that, if we do not do this carefully, we will be removing opportunities from a large number of people for whom this is important? Is not the rush to regulate a very dangerous concept in this case?"
Lady Vere responded:"There seems to be a 'computer says no' attitude to new-fangled things. I absolutely reject that. While members of the Lords may or may not use buy now, pay later, I know many young people who do, and they do so very successfully."
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