After many years of delay by the regulator and previous government, consumers are finally being offered protection against the risks of ‘Buy Now, Pay Later’ (BNPL).
Many see it as a harmless method of spreading out payments for everyday purchases, but it can have unintended consequences for those who don’t adhere to payment schedules.
While BNPL has historically not impacted credit scores, agencies like Experian are starting to incorporate it into reports and make it available to lenders.
There can also be high fees associated with using BNPL.
A survey by comparison site Finder.com revealed 53% of people using BNPL had paid late fees over the past 12 months, meaning an estimated 10 million people in the UK were being charged for missing payments.
Until now, the impact has been limited to a financial penalty, but should the trend of missing payments continue as credit agencies include BNPL in credit scores, it could ruin the aspirations of millions of people seeking credit for important life events.
Consumer fintech company Investment Evolution Credit has identified the opportunity to better serve millions of people in the UK with loans that better suit their needs and provide them with a transparent method of financing those tricker periods of life that over half of the people in the UK experience.
“Changes to ‘Buy Now, Pay Later’ regulations are well overdue,” said Marc Howells, CEO of Aquis-listed Investment Evolution Credit.
“Millions of people in the UK deserve better protection. Many consumers are unaware of the risks of using BNPL and its impact on their financial futures. We hope strengthening consumer protection by raising awareness of the risks of BNPL will spur consumers to seek alternative forms of finance that are better suited to their circumstances.”
Taking a broad perspective of the the opportunity that lies ahead of IEC and their investors, IEC has a large addressable market of millions of consumers in the UK. According to data compiled by FCA in their Financial Lives survey, 57% people in the UK use some form of credit.
In addition to BNPL, many individuals will use harmful forms of credit, including payday loans or high-interest credit cards. Of course, mainstream banks offer options such as overdrafts and loans, but even these can be expensive or difficult to access, especially for the more vulnerable.
The heart of IEC’s mission is to provide a better-suited product for people using existing alternatives that may not support their financial futures.
Speaking at a recent UK Investor Magazine event, Marc Howells, CEO of IEC, was upbeat about the company’s outlook and confident that it is well-placed to take advantage of the gap in the market.
Payday lenders, who were rightly reprimanded for unethical practices, have left a canyon-sized hole in the consumer credit market. The sector is also ripe for innovation by a company with a strong process designed to protect consumers and enhance access to credit.
Investment Evolution Credit has set about meeting this demand.
Through establishing operations in the US, IEC has developed proprietary AI-driven technology designed to provide consumers with finance that suits their needs. In the US, the company offers loans of up to £10,000 at rates between 19.9% and 49.9%. Plans are to replicate their early success in the UK.
IEC can enter the UK market during a transition period without the legacy issues associated with many lenders, which investors should see as a major positive. The company is applying to the FCA to begin operations in the UK in 2025.
IEC is certainly a company to watch as it builds momentum.
Like many Aquis-listed shares, those investors interested in purchasing IEC shares may have to ring their broker for a quote. Some platforms, IG being one of them, offer electronic dealing in Aquis shares and can be dealt easily like any other stock on trading platform.