Martin Lewis warns 'protection is needed' for buy now pay later services

There are fears that a number of buy now pay later (BNPL) multinational firms could exit the UK market should regulations be implemented.

Martin addressed the shelving rumours by addressing his social media followers: "Pls DON'T let this be true.

"Yes, BNPL (buy now pay later) used right can help people borrow interest free to spread necessary costs, but it’s still a debt.

"Protection's needed for when it's not right. Regulation doesn't curtail the industry."

The way the system works is that the BNPL firm covers the cost of payment for an individual to a retailer.

The funding for the transaction is usually offered interest and free, though individuals are likely to be charged should they miss a repayment.

Fears centre around the possibility of people borrowing more than they can pay back.

Martin said: "Clearly amidst a cost of living crisis, when many are desperate and living on deficit budgets - all forms of major consumer debt need the protections embedded which regulation gives.

"I'd urge @Jeremy_Hunt to continue with the plans, which we were promised years ago, and have huge support amongst consumer groups (and some BNPL firms) and ensure it's fully regulated like the debt it is."

New regulations floated by the government included granting customers the power to request Section 75 refunds and to escalate complaints to the free, independent Financial Ombudsman Service.

A Government spokesperson confirmed to the MSE website that "no decisions have been made" at this point in time but the Treasury was reviewing the responses of its most recent consultation on the move in "due course".

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The Government had previously touted new regulation as set to protect around 10million customers.

Many have struggled to make their mind up on whether BNPL sites, such as Klarna, Payl8r, Shop Pay Instalments, Affirm, and Afterpay, are lifelines or loan sharks.

It comes as Martin Lewis issued two holiday warnings for Britons traveling abroad this summer.

The Money Saving Expert (MSE) founder directed fans to "remember" two tips if you have an "overseas holiday coming up".

Lewis reminded viewers in January to arrange travel insurance when they book their holiday to avoid "heartbreak".

He said: "Get your travel insurance as soon as you book. Please do not be the person who sends me the heartbreaking email this year.

"If you booked a holiday, travel insurance can be as little as £9.

"Get yourself on a comparison site, get yourself some protection so that if you can't go on the holiday, you're covered, not just if something goes wrong while you are on the holiday."

He continued: "While we're on travel, just another quick one. If you're going to the EU, ensure you've got a valid European Health Insurance Card [EHIC] or Global Health Insurance Card [GHIC]."