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From today (15 July), many ' buy now, pay later' (BNPL) products will come under Financial Conduct Authority (FCA) regulation for the first time.
Whether you're buying clothes, furniture or the latest tech, BNPL payment options from firms such as Klarna and Clearpay have become a common way to spread the cost over 30 days or a few months, interest-free. One in five UK adults, equivalent to 10.9 million people, used a BNPL product at least once in the year to May 2024, up from 17% in 2022, according to the FCA's latest data.
However, until now, these short-term credit options haven't offered the same protections as other forms of borrowing, such as credit cards, raising concerns that BNPL users could fall into unaffordable debt with little protection if something goes wrong.
Plans to regulate BNPL were first announced in 2021, after several Which? investigations highlighted consumer harm in the sector.
Here's what you should know about the new rules.
Before offering BNPL, providers will have to carry out affordability checks.
The FCA says these checks should be proportionate, so the level of scrutiny may vary depending on the amount you're borrowing. However, providers will need to make sure you can afford to repay what you borrow before approving an application.
Which? has previously raised concerns that many BNPL shoppers don't realise they're taking on debt or consider what could happen if they miss repayments, which can lead to late fees and damage to credit scores.
Before you take out a BNPL agreement, the provider will have to give you clearer information about the product.
This includes key details such as how much you're borrowing, the total cost of your purchase, how much and how often you'll need to repay, what could happen if you miss a payment and whether your credit record may be checked.
Information about your rights to withdraw from or cancel the agreement, pay it off early and complain to the Financial Ombudsman must also be provided or made available before you sign up.
For eligible purchases between £100 and £30,000, you'll benefit from Section 75 protection, bringing BNPL more into line with paying with a credit card.
This means the BNPL provider can be jointly liable with the retailer if something goes wrong with your purchase. For example, you may be able to claim a refund if goods don't arrive, are faulty, or the retailer goes bust.
The reforms are also intended to give shoppers fairer and faster refunds. Which? has previously found that some 'pay later' customers were left waiting for refunds, or for outstanding repayments to be settled, after returning unwanted items.
If you're unhappy with a BNPL provider, you should complain to the company. Previously, that's about as far as you could take a dispute. But now, if you're not satisfied with its response, you'll be able to take your case to the Financial Ombudsman Service (FOS).
The FOS is a free, independent service that can investigate complaints and, where appropriate, order firms to put things right. It expects to receive around 2,000 BNPL complaints during this financial year.
Complaints could include whether the lending was affordable, whether you understood the agreement or how the provider handled your account.
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If you miss a payment, your provider will need to contact you promptly, explain the consequences and give you reasonable notice before taking further action. If you're showing signs of financial difficulty, it should also offer appropriate support and tell you where to get free debt advice.
StepChange debt charity says it's important to seek help as soon as you're struggling with repayments rather than taking on more borrowing.
Free debt advice is available from organisations including StepChange, Citizens Advice and National Debtline.
The new rules only apply to BNPL agreements taken out from 15 July 2026.
If you already have a BNPL agreement, it will continue under the existing rules. That means you won't automatically gain the new protections, such as Section 75 or access to the FOS for purchases you've already made.
Firms that aren't yet fully authorised can continue operating under the FCA's temporary permissions regime while their application is assessed.
Providers operating under temporary permissions must still comply with the new BNPL rules, giving customers the same protections as they would receive from a fully authorised firm.
You can check whether a provider is authorised or operating under temporary permission using the FCA's firm checker.
Rocio Concha, director of policy and advocacy at Which?, said:
‘Which? campaigned for regulation of Buy Now Pay Later (BNPL) providers such as Klarna and Clearpay, so it's great news that this is finally happening and means users of these services will benefit from stronger safeguards.
‘Key changes include access to the Financial Ombudsman Service if something goes wrong, as well as clearer information at checkout and affordability checks to help prevent people from taking on debt they can't afford.
‘Before choosing BNPL, shoppers should consider whether they can comfortably afford the repayments and understand the consequences of missing them. Regulation should make those decisions easier by ensuring people have clearer information and stronger consumer rights.’
