Regulation for the rapidly growing Buy Now Pay Later sector is coming, but more robust safeguards are needed in the meantime.

Millions of people use Buy Now Pay Later when shopping online without realising they are taking on debt.

Consumer body Which? is warning that stronger safeguards are needed now.

You typically get an interest-free debt when using Buy Now Pay Later, but late charges can be applied if you miss a payment.

Getting behind with Buy Now Pay Later payments can also cause significant damage to your credit score.

As things stand, the sector is unregulated.

The government announced a review of the sector last February, with regulation expected to come into force this year or next.

Read how Buy Now Pay Later can cause us stress.

Before regulation is introduced, the Financial Conduct Authority (FCA) will hold a consultation.

With regulation likely to take some time, Which? wants to see the immediate introduction of affordability checks and more accessible small print.

When speaking to users of Buy Now Pay Later services, Which? found that many people did not consider it a form of credit, instead describing it as a “way to pay” or a “money management tool”.

Failing to understand the true nature of Buy Now Pay Later as debt could lead customers to unwittingly taking on problems if they fail to maintain their payments.

Rocio Concha, the director of policy and advocacy at Which?, said:

“BNPL schemes can offer speed and convenience at the checkout, but our research shows that many users do not realise they are taking on debt or consider the prospect of missing payments.” Read more from Which

The Treasury consultation into the Buy Now Pay Later sector ends today.

When the FCA launches its consultation, they are likely to focus on the business model, customer education, contract definitions, advertising and creditworthiness of customers.

The result of this consultation and subsequent regulation is difficult to predict but more clues will emerge as consultation responses are published.