New FCA Rules on Buy Now, Pay Later Aim to Protect UK Shoppers
The UK’s financial watchdog is taking a firm stance on the ever-growing Buy Now, Pay Later (BNPL) sector, signalling sweeping changes that aim to better protect consumers from spiralling into debt.
The Financial Conduct Authority (FCA) is setting out a clear message: lenders must start acting more responsibly. Under a new consultation, the FCA says all BNPL providers will need to run stricter affordability checks and offer better support for customers struggling with repayments.
“We have long called for BNPL products to be brought into our remit, so people can benefit from BNPL while being protected,” said Sarah Pritchard, deputy chief executive at the FCA.
These changes will come into effect when BNPL products officially fall under FCA regulation next year.
BNPL services, which allow shoppers to split payments into manageable chunks, often interest-free, have surged in popularity. From fashion to electronics, it’s now a common option at online checkouts.
But the ease of access has sparked concern. The FCA reports that 1 in 5 UK adults—roughly 10.9 million people—used BNPL between May 2023 and May 2024. More worryingly, 1.1 million of them owe £500 or more in unregulated BNPL debt.
“What we’re asking in our rules is for firms to carry out an affordability check, to ensure that consumers can pay,” said Alison Walters, interim director of consumer finance at the FCA.
She added that companies should clearly outline late fees, the consequences of missed payments, and potential impacts on credit scores.
From July 2026, firms will need to register under a temporary permissions regime before applying for full FCA authorisation. These new rules target Deferred Payment Credit (DPC)—a type of unregulated, interest-free loan repayable in 12 months or less.
The changes are part of a wider push to hold financial providers accountable under the Consumer Duty, a framework requiring them to design products that prioritise consumer wellbeing.
“Our regulation will help consumers navigate their financial lives… with checks on whether they can afford to repay,” added Ms Pritchard.
Major players in the BNPL space, including Klarna and Clearpay, have welcomed the regulatory move. “We’re entering the home straight to make BNPL regulation a reality – a major win for UK consumers,” said a Klarna spokesperson.
Clearpay echoed that sentiment, saying regulation will bring “clear compliance standards” and more consumer trust.
Meanwhile, consumer groups and debt charities are applauding the proposals.
“It’s incredibly reassuring to see the FCA’s consultation,” said Vikki Brownridge of StepChange Debt Charity.
“BNPL can deepen debt problems… this will provide an added layer of protections for consumers.”
Consumer expert Vix Leyton also weighed in, warning that while BNPL can offer short-term relief, it’s not a long-term solution unless handled responsibly.
“Proper affordability checks… are vital to stop people unintentionally kicking the financial can down the road.”
The FCA is inviting public feedback on the consultation until 26 September 2025. The goal is to finalise a regulatory framework that balances consumer safety with space for innovation in the BNPL market.
With lending through DPC rocketing from £60 million in 2017 to £13 billion in 2024, the need for oversight has never been more urgent.
“Regulation will mean that consumers will be subject to affordability checks… and be given sufficient information,” said Rocio Concha, director at Which?
