A credit union boss says regulation of the "buy now pay later" (BNPL) industry is long overdue to protect customers.

Bury and Bolton-based Hoot Credit Union CEO, Chris Canham, has reported more of its members are signing up to BNPL deals to "fund Christmas" before facing "unaffordable repayments" in January.

The warning comes as the government has launched a consultation on bringing BNPL companies under the supervision of the Financial Conduct Authority (FCA) and applying the Consumer Credit Act to help ensure borrowers receive clear information, avoid unaffordable borrowing and have strong rights when issues arise.

The consultation will close on November 29.

Final legislation is expected to be laid in Parliament early next year with the rules taking effect in 2026.

Mr Canham said: “Millions of people use BNPL firms when shopping online or in store.

"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.

"Hoot members tell us that they are increasingly being caught in the trap of signing up to BNPL deals to fund Christmas, and then face multiple and unaffordable repayments in January.

"Online shopping just five or six times for Christmas gifts can accumulate a hefty repayment commitment without realising the consequence of having to repay, or understanding that BNPL is a debt that will appear on a credit report.

"And debt charities have argued that BNPL companies encourages people to buy things they can’t afford.”

The FCA says it has "long called for" BNPL products to be "brought into our remit".

A spokesperson said: "We welcome the government's consultation on the regulation of BNPL products.

"We’re already preparing and will consult on the rules firms will need to follow once the law is changed.

"We will ensure consumers are appropriately protected while enabling firms to innovate and grow."

Meanwhile, Mr Canham said a credit union "save and borrow scheme to spread the cost of Christmas" and "save for next" is advisable.

Mr Canham added. “Save as you borrow (SAYB) is the practice of credit unions to encourage their members to put an amount into a savings account as part of making a loan repayment, meaning that when the loan is repaid, there is a savings pot to call upon to help the cost of next Christmas.

"At Hoot, 84 per cent of new borrowers are saving for the first time.”