New protections to safeguard Buy Now Pay Later borrowers
The Financial Conduct Authority has confirmed stronger protections for Buy Now Pay Later borrowers, effective from 15 July 2026. This follows the government's decision to bring the sector under FCA regulation.
Key pillars of new BNPL regulation
Under the new framework, Buy Now Pay Later agreements will fall under the Consumer Duty, ensuring clear information for borrowers.
This includes upfront details on payment schedules, amounts, and consequences of missed payments.
Lenders will be required to conduct proportionate affordability checks before offering BNPL, ensuring customers can repay what they borrow.
Furthermore, firms must offer support to customers facing financial difficulty, directing them to free debt advice when appropriate.
Consumers will also gain access to the Financial Ombudsman Service for complaints and compensation if issues arise with their BNPL agreements.
FCA balances innovation and protection
The Buy Now Pay Later market has expanded significantly, reaching over £13 billion in 2024 from £0.06 billion in 2017. This growth means 10.9 million UK adults used BNPL in the past year.
While recognizing BNPL as a vital credit source, the Financial Conduct Authority (FCA) noted the current absence of protections for frequent users who might face affordability challenges.
Sarah Pritchard, deputy chief executive at the FCA, emphasized that 'no one should be lent to if they're unable to repay.'
The new regulation mandates FCA authorization for BNPL lenders, with the FCA providing pre-application support to assist firms in their readiness.