Buy Now Pay Later (BNPL) borrowers will receive stronger regulatory protections from 15 July 2026 after the Government confirmed that the sector will be brought under the supervision of the Financial Conduct Authority (FCA).
The move marks a significant shift for a fast-growing segment of consumer credit that has, until now, operated without the same safeguards applied to other lending products.
Under the new framework, BNPL products will fall within the scope of the FCA’s Consumer Duty. This will require firms to demonstrate that they are delivering good outcomes for customers and treating them fairly across the lifecycle of the product.
For consumers, the changes are designed to introduce clearer information at the outset of an agreement. Borrowers will be provided with transparent, upfront details setting out when payments are due, how much must be repaid and what consequences may follow if a payment is missed. The regulator believes this will reduce confusion and help customers better understand the commitments they are entering into.
Affordability assessments will also become mandatory. Lenders will be required to carry out proportionate checks to ensure that customers can afford to repay the sums they borrow before credit is granted. This is intended to address concerns that some users may be taking on multiple BNPL agreements without a clear view of their overall exposure.
In addition, firms will need to provide appropriate support to customers who fall into financial difficulty. Where necessary, lenders will be expected to signpost borrowers towards free debt advice services. Consumers will also gain access to formal redress mechanisms. If disputes arise, complaints can be escalated to the Financial Ombudsman Service, providing a pathway to compensation where standards have not been met.
BNPL has become a widely used form of short-term credit, with around 11 million people in the UK estimated to use the product. While it offers flexibility and convenience, policymakers have expressed concern about repeat usage by consumers who may struggle to keep up with repayments. The extension of FCA oversight aims to strike a balance between supporting innovation in FinTech and strengthening consumer protection.
Sarah Pritchard, deputy chief executive at the FCA, said: “We want the Buy Now Pay Later sector to thrive – it provides an important source of credit to many – and we will continue to support firms who want to develop innovative new products. But crucially, no one should be lent to if they’re unable to repay, because that could worsen their financial situation. Now Parliament has given us the powers, we’re putting in place proportionate protections for the 11 million people who use it.”
BNPL providers will be required to seek authorisation from the FCA in order to continue offering these products. The regulator has indicated it will offer pre-application support to help firms prepare for the new regime, signalling an intention to ensure a smooth transition while embedding higher standards across the market.
The reforms represent one of the most significant regulatory interventions in the UK consumer credit landscape in recent years, placing BNPL firmly within the mainstream of regulated financial services and aligning it more closely with established lending practices.
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