Martin Lewis Issues Warning To People Who Use Klarna And Other ‘Buy Now Pay Later’ Services

If you’re in the habit of using Klarna or other Buy Now, Pay Later (BNPL) services when you’re shopping online, Martin Lewis and his Money Saving Expert (MSE) team have a little warning for you.

In the latest MSE newsletter (October 22nd), Lewis advised readers to 'watch out' when it came to using the shopping option when checking out.

What is Buy Now, Pay Later?

In case you’re unfamiliar, BNPL services usually provide purchasers with a couple of options for to make payments ‘more manageable’ including buy now, pay in 30 days, splitting the cost in to three equal, monthly segments, or even, in some cases, to let you pay in 12 months' time.

But in his newsletter, Lewis highlighted some pretty major changes coming to BNPL schemes - and warned about using them in the meantime.

Directing people to an MSE article on the issue, Lewis wrote: “Do you use Buy Now, Pay Later? Watch out - it's not regulated (yet!). That's now due to change, but not until 2026.”

“Millions of people use Buy Now, Pay Later firms, such as Klarna and Clearpay, when shopping online or in store,” the article states.

“Managed correctly, they can be a cheap and quick way of accessing credit. But research shows many users aren't aware that if something goes wrong, you face late fees, and, increasingly, marks on your credit file.”

Marks on your credit file indicate you have ‘bad credit’ and provides evidence to potential lenders that you may have difficulty keeping up with payments for things like cars and phone contracts.

A bad credit history can mean you’ll face trouble borrowing money in the future for products that require a financial agreement such as a mortgage.

What is changing with Buy Now, Pay Later rules?

As it stands, rules surrounding BNPL are not the same as when you enter a standard credit agreement. But that is changing.

Four key changes have been put forward by the Government on how BNPL should change. Once the rules come in to force - which will be in 2026 - those providing BNPL schemes must give 'clear and accessible information about the risks involved'.

“This should enable you to make fully informed decisions before using BNPL services,” the MSE team says.

Affordability checks will also have to be performed on those looking to use BNPL in the same way that you will be soft credit checked for taking out a car on finance.

Section 75 protection on goods bought with BNPL services will also be introduced. MSE explains: “This would apply to items costing over £100 but not more than £30,000, as it does for credit cards currently. It means the BNPL provider will be jointly liable with the retailer if anything goes wrong.”

Finally, people using BNPL will be able to take issues to the Financial Ombudsman Service if they are not happy with the experience or treatment they have received.

Martin Lewis says it's a 'travesty' that BNPL has never had these proper regulations.

“Buy Now, Pay Later is now ubiquitous at online checkouts, so the fact it's never been regulated is a travesty I and others have long campaigned on,” he said.

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“The last Chancellor promised to regulate, then the tumbleweed rolled as he went silent, so I am delighted the new Government has quickly restarted the process.

“BNPL can be useful, allowing those who need to spread payments for a budgeted, necessary purchase like a plumber to do it interest-free. Yet it's been sold as a lifestyle choice, not a debt, and pushed for instinct buys or even takeaways. Too many are in trouble with multiple BNPL repayments, leading to debt-chasing and credit file damage.

“Regulation will mean firms must be overt that it's a debt, have proper affordability rules, and will crucially let people go to the ombudsman if things go wrong. Yet it’s not coming in until 2026, so people should still be very wary until then.”