This article is for general information only. It is not financial advice and does not recommend a specific lender or product.

The UK government and the Financial Conduct Authority (FCA) have confirmed that buy now, pay later (BNPL) products will be brought under formal FCA regulation. The change is significant: BNPL has operated outside the main consumer credit framework since it grew rapidly during the early 2020s, meaning shoppers have had fewer formal protections than with a credit card or personal loan.

What is changing?

  • BNPL lenders will need FCA authorisation to operate in the UK consumer market.
  • Lenders will be required to carry out affordability checks before approving a BNPL agreement.
  • Borrowers will gain access to the Financial Ombudsman Service (FOS) to raise complaints about BNPL providers.
  • BNPL agreements will need to include clearer, standardised information about costs, repayment terms and the consequences of missing payments.

The key legislative and regulatory steps to date are as follows. HM Treasury published its consultation response on BNPL regulation in June 2023 ("Buy now pay later: consultation response", HM Treasury, June 2023, available at https://www.gov.uk/government/consultations/buy-now-pay-later-bnpl-regulation), confirming that BNPL would be brought within the FCA's remit via amendments to the Consumer Credit Act 1974. The FCA subsequently published Consultation Paper CP23/5, "Regulation of Buy-Now Pay-Later" (FCA, February 2023, available at https://www.fca.org.uk/publications/consultation-papers/cp23-5-regulation-buy-now-pay-later), setting out its proposed conduct rules for BNPL lenders. As of the time of writing, final rules and a confirmed implementation date have not yet been published. For the most current position, readers should consult the FCA's live BNPL policy page at https://www.fca.org.uk/firms/buy-now-pay-later.

Why does this matter for shoppers?

BNPL is widely used at online and in-store checkouts. Because it has sat outside FCA regulation, the level of affordability checking and disclosure has varied considerably between providers. For example, large BNPL providers such as Klarna and Clearpay have operated under a regulatory exemption that does not require them to follow the same affordability and disclosure rules that apply to credit cards or personal loans. Bringing BNPL into the regulatory perimeter means the same baseline rules that apply to those products will also apply to BNPL.

For most shoppers, the practical effect is more consistent information at the point of borrowing, stronger grounds to complain if something goes wrong, and a formal obligation on lenders to check that repayments are affordable.

Who may be affected?

  • Shoppers who use BNPL regularly, particularly across multiple retailers or providers at the same time.
  • Anyone who has missed a BNPL payment or been charged a late fee, and who previously had limited routes to complain.
  • People with thin credit histories: the FCA's proposed rules (CP23/5) include provisions that could result in BNPL activity appearing on credit files. However, whether and how credit reference agencies will report BNPL data has not yet been confirmed as part of the final rules, so the practical effect on credit files remains subject to change.
  • BNPL providers, who will need to apply for FCA authorisation and update their processes.

It may be worth checking how any BNPL balances sit alongside your other credit commitments before the rules come fully into force. A useful first step is to list any active BNPL agreements and note their repayment dates. It can also help to check whether your existing BNPL provider is already voluntarily FCA-authorised, as some providers have sought authorisation ahead of the formal deadline. This is not advice, but a useful prompt: if repayments are already feeling stretched, that is worth addressing sooner rather than later.

Concerned about BNPL debt?

If missed payments or financial stretch are a concern, free and impartial debt advice is available. MoneyHelper (the government-backed money guidance service) can be reached at https://www.moneyhelper.org.uk or by phone on 0800 138 7777. StepChange Debt Charity offers free debt advice at https://www.stepchange.org or on 0800 138 1111.

What to read next

  • Credit cards guide, how regulated consumer credit works, what your rights are, and how credit cards compare to other forms of short-term borrowing.
  • Personal loans guide, for context on how affordability checks and FCA rules currently apply to regulated credit products.
  • Getting financial advice, if you are unsure how BNPL debt fits into your wider finances.

Sources

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