The change will mean stricter checks (stock image) (Image: Getty)
A regulatory shift is poised to come into force imminently, in a significant development for anyone using ‘buy now, pay later’ (BNPL) platforms online. This follows the UK government’s official confirmation that enhanced consumer safeguards will extend to BNPL arrangements, incorporating more rigorous checks.
The measure will bring most BNPL providers under regulation from July 15, 2026. The amendment, revealed in February 2026 and stemming from proposals initially unveiled in 2021, seeks to harmonise BNPL products with other forms of credit.
BNPL platforms generally enable purchases to be divided into interest-free payments. Among the most extensively utilised providers are Clearpay, Klarna, Zilch and Laybuy.
Between 10 and 11 million people across the UK routinely employ BNPL services. Some estimates suggesting up to 14–15 million have used it in the past year, driven by high cost-of-living pressures. Recent data indicates over eight million people use it for small, everyday purchases under £50.
The principal transformation for consumers is the implementation of Section 75 protection to most BNPL arrangements. This vital safeguard ensures that, for transactions ranging from £100 to £30,000, the BNPL provider will share liability with the merchant, reports the Mirror.
Read more: BBC’s £3k alert to anyone using ‘pay later’ schemes as accounts ‘drained’
Read more: New late payment fees brought in by Buy Now Pay Later giant
Shoppers will acquire the entitlement to pursue a refund directly from the BNPL provider should goods prove defective, fail to arrive, or the merchant goes out of business. Presently, BNPL platforms remain unregulated by the Financial Conduct Authority (FCA), meaning they lack Section 75 protection, in contrast to credit card transactions.
Under the new regulations, BNPL customers will be able to refer complaints to the Financial Ombudsman Service (FOS) if they encounter problems with a BNPL provider or transaction. Consumers will also enjoy “fairer and faster” access to refunds.
The new legislation places stringent obligations on BNPL providers. Companies will be obliged to carry out upfront affordability checks to ensure customers can handle the debt they are assuming.
Previously, many providers, including Klarna, PayPal, and Zilch, have only conducted soft credit checks. Companies have not been required to perform affordability assessments either.
New BNPL protections to come into effect from July 2026 (stock image) (Image: Getty)
Lenders must also adhere to consistent standards. This is designed to provide customers with transparent information on how each product varies in terms of repayments, late fees, and credit checks, an area where worries have been voiced due to multiple BNPL options frequently appearing at online checkouts.
Providers will also be obliged to offer assistance to customers in financial hardship and signpost them towards free debt advice where appropriate. This addresses previous concerns that many BNPL customers do not understand they are taking on debt or consider the implications of missed repayments, including late fees and damage to credit scores.
The services as used by millions across the UK (stock image) (Image: Getty)
How can I stay safe whilst using buy now pay later schemes?
When using Buy Now, Pay Later (BNPL) schemes, it’s crucial to regard them as debt rather than “free money”, as emphasised by the likes of Martin Lewis. Despite their convenience, BNPL can result in excessive spending, penalty charges, and may damage your credit rating.
To use BNPL responsibly, you must monitor your finances, keep track of your repayments, and familiarise yourself with the terms of each provider.
Guidance published by consumer champion, Which?, advises: “Always read the T&Cs carefully. Set up alerts for repayments. Draw up a budget. Make any returns promptly. Contact the BNPL provider if you think you might miss a repayment.”
