Millions of shoppers are gaining protection with new regulations when using buy now, pay later (BNPL) services.
New Financial Conduct Authority rules coming into effect on 15 July give BNPL customers more rights and clearer protections.
The changes mean all BNPL providers are subject to the FCA’s regulation, meaning they will need to abide by stricter rules when lending.
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BNPL services are increasingly popular, especially for those who shop online, with the FCA estimating 11 million people in the UK the payment method.
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The largest providers in the UK include Klarna, Clearpay, PayPal’s pay later service, and Zilch.
The FCA said the BNPL sector provides an important source of credit for many who want to access it, but found there are no protections in place for those who use it repeatedly or are unable to afford it.
Here is what the changes will mean for you.
BNPL lenders must be regulated
All BNPL or deferred payment credit (DPC) lenders need to be authorised by the FCA or part of its temporary permissions regime.
You can check whether a firm can offer these credit agreements on the FCA Firm Checker.
There are some limits to how the regulation works though.
Any BNPL agreement that you took out before 15 July 2026 will remain unregulated and the new protections won’t apply to these agreements.
Tougher affordability checks
Using a BNPL service can make sense for those who want to spread the cost of a large purchase into smaller, monthly instalments, but it has left some people borrowing more than they can afford and often getting caught out by late fees and interest payments.
Under the new rules, BNPL lenders are legally obliged to carry out affordability checks on borrower’s income and spending if they have a poor credit history before allowing them to take out a short-term BNPL loan.
As with other financial agreements, BNPL lenders have to give you clear information on the amount you are borrowing, how much you will repay and when it is due, plus any late fees and interest that could be owed.
Better customer support
BNPL lenders also have to be more supportive if you are struggling with repayments.
If you miss a repayment, firms will need to contact you to let you know and explain what this means and offer support if you are struggling.
Right to complain
One of the main benefits of BNPL being regulated is that consumers will have the right to complain if something goes wrong such as if you think you have been mis-sold.
Similar to other financial products, you can now complain to the lender first and if you are dissatisfied you can take your issue to the Financial Ombudsman Service.
Do the new regulations go far enough?
While many have welcomed the new regulations, saying they will help make BNPL lending fairer, some worry the new regulations do not go far enough.
Greg Davies, from behavioural finance firm Oxford Risk, said while the new regulation is welcome, it fails to fully deal with other structural issues within the BNPL sector.
He said: “Affordability checks based purely on patchy credit histories are necessary but reactive. Behavioural signals such as repeat usage, stacking across providers, or escalating short-term commitments can indicate vulnerability earlier than traditional credit data.
“The right goal is proportionate protection: preserve flexibility for those using the product responsibly, while introducing clearer visibility and friction where patterns suggest mounting risk. That is how you protect consumers without killing innovation.”
Meanwhile, Alastair Douglas, chief executive of fintech TotallyMoney, warned that some consumers may look for riskier credit elsewhere.
He said: “Regulating Buy Now Pay Later is a positive step, but one which is long overdue. Analysts estimate that up to a third of current BNPL users could lose access once the new rules kick in – which tells you just how many people have already been borrowing without the proper safeguards.
“The problem the government and regulator face next is what fills the BNPL gap once lending is tightened up. If people who’ve relied on it for so long suddenly find themselves locked out, they’ll start to look for credit elsewhere – which could push the vulnerable into the arms of unregulated and illegal lenders.”
Money Wellness says the changes are a positive step for consumers but they could also mean some people who have always been approved for BNPL are declined for the first time.
Rather than seeing this as simply an inconvenience, the organisation says it may be an important warning that someone's finances are becoming stretched.
Matthew Sheeran, external relations manager at Money Wellness, said: "If someone who has always been approved suddenly finds they're declined after the new rules come into force, it could be a sign that their financial circumstances have changed.
“Rather than immediately looking elsewhere for credit, it's worth taking a step back and reviewing your finances. Getting free money advice early can stop a temporary problem becoming a much bigger one."
