New rules and regulations are set to affect the Buy Now Pay Later (BNPL) industry, affecting millions of shoppers. These schemes allow people to spread out the cost of purchases but, unlike other forms of debt, there are few affordability checks or regulations in place.
This has led to some people unwittingly taking on more than they can manage. The Financial Conduct Authority (FCA) has confirmed that these new regulations will come into effect on July 15, 2026, following a consultation proposing key changes. The consultation is expected to conclude on September 26, 2025.
Anyone using the schemes will notice five specific changes:
- More clear and accessible information about risks
- Affordability checks on every purchase
- Section 75 protection making the BNPL provider jointly liable if anything goes wrong with your purchase
- Financial Ombudsman Service will be able to take complaints about BNPL firms
- Immediately being contacted if you miss a repayment
Martin Lewis, a leading campaigner for these regulations, celebrated the confirmed implementation date but cautioned shoppers not to become complacent. He stated: « The protections are not fully in place yet.
« For example, you won’t be able to go to the Ombudsman if something goes wrong for at least a year. So if you’re getting Buy Now Pay Later at the moment, you should still be very careful. »
Recent studies from the Financial Conduct Authority revealed that one in five individuals utilised unregulated BNPL firms last year, and debt help charity StepChange discovered that BNPL users are twice as likely to cover essential bills with borrowed money.
The new regulations will necessitate firms to ensure customers are fully aware of the risks associated with BNPL schemes prior to using the service. Firms will also be required to verify that shoppers using their services can afford the repayments on each individual purchase.
Firms may conduct affordability checks on customers when they initially open accounts, but with the new rules, they will need to run these checks on every purchase. However, these won’t be as stringent if you’re consistently only borrowing small amounts, according to MSE.
Section 75 protection will apply to items costing between £100 and £30,000, enabling people to potentially receive compensation if something goes wrong with their purchase. This protection is currently provided on credit card purchases.
Next summer, if a customer encounters issues, they will be able to escalate their complaint to the Financial Ombudsman Service, an independent arbitrator. This should also make it easier to get a refund for those who are entitled to one.
Lastly, if you miss a repayment, firms will need to alert you as soon as possible, highlighting the consequences of non-payment, how to rectify the situation and explain what you owe. It should also direct people who are struggling towards free debt help services.
