Researchers call for better credit regulation to protect young people

Tuesday 19 December 2023

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Coventry University academics are calling for improved regulation of credit schemes after research reveals that young people are not always aware that they are using credit when using products such as Buy Now Pay Later (BNPL).

BNPL lenders pay the retailer on behalf of the customer, who then repays the lender over a few weeks or months, meaning they can spread the cost of their shopping. Some well-known BNPL providers include Klarna, Clearpay and Laybuy, and can be found on the websites of many popular online retailers.

Dr Lindsey Appleyard and Dr Hussan Aslam from Coventry University’s Research Centre for Business in Society have authored a report which calls on the Financial Conduct Authority and the Money and Pensions Service to limit young people’s unnecessary exposure to credit to protect their financial wellbeing.

This follows the outcomes of a research project entitled ‘Your Money, Your Life’ which interviewed 80 young people aged 18-24 to learn about their experience of borrowing and their use of unsecured credit.

The research showed that the use of credit was found to be almost an inevitable part of young people’s financial experience, but around a fifth of the young people they spoke to did not think of certain credit products as a form of credit.

According to those that were interviewed, social taboos around talking about money and credit openly, mean young people may not have the opportunity to learn how to use it well.

Their findings suggest that the lack of knowledge around lending schemes may be due to how the products are marketed on social media, however considering products as a payment service rather than a form of credit may also be a coping method used by young people to reduce fear of taking on debt.

Young people have experienced significant financial setbacks because of the Covid-19 pandemic and the cost-of-living crisis.

Our research shows that they are financially capable, but factors outside of their control, such as increasing housing costs and energy bills, often make it challenging to manage their finances and often turn to credit lenders as a solution. Our recommendations suggest that young people could benefit from better and tailored support to help them navigate an increasingly complex financial system.

Dr Lindsey Appleyard

Their report calls for a list of changes to enable young people to manage their credit better, including:

  • Banks, lenders and Fintech (technology used to support or enable banking and financial services) providers should refine money-management products and services, and improve their reach to help young people manage their credit and financial well-being.
  • The Money and Pensions Service should review financial education for young people, particularly around credit, by working with schools, universities, employers and specialist organisations to provide financial education.
  • The Government should address broader financial policies around income and spending to tackle factors beyond young people’s control, which make managing credit more difficult.
  • Greater certainty and support is needed from the Government to help young people to meet essential bills such as the cost of housing and utilities to avoid the use of credit.

The research is supported by the abrdn Financial Fairness Trust, an independent charitable trust that funds research, policy work and campaigning activities to tackle financial problems and improve living standards for people on low-to-middle incomes in the UK.

Learn more about Dr Appleyard and Dr Aslam's research within the Centre for Business in Society.

For independent and free support and advice on managing finances, visit