Starting July, customers using buy now, pay later services will be subject to enhanced protections, including affordability assessments and access to assistance in case of financial difficulties. The Financial Conduct Authority (FCA) will begin regulating the sector on July 15, 2026, ensuring that all users receive transparent information about their agreements upfront.
Key details to be provided include payment schedules, amounts due, and consequences of missed payments. Lenders offering buy now, pay later options must conduct thorough affordability checks to ensure borrowers can repay their loans. Additionally, support services, such as directing customers to free debt advice, must be made available to those facing financial challenges.
Users of buy now, pay later services will have the right to escalate complaints to the Financial Ombudsman Service (FOS) if they feel unfairly treated. Lenders must obtain authorization from the regulator and comply with Consumer Duty rules, which elevate consumer protection standards in the UK financial industry. Companies will have six months from the enforcement date to apply for full authorization.
While buy now, pay later arrangements enable individuals to spread out payments, concerns have been raised about potential debt burdens. The FCA reported a market growth to £13 billion in 2024, with over 10.9 million adults utilizing buy now, pay later services in the preceding 12 months.
Sarah Pritchard, FCA’s deputy chief executive, emphasized the importance of responsible lending practices to prevent exacerbating borrowers’ financial situations. The FCA is implementing proportionate safeguards for the millions using buy now, pay later services.
Peter Tutton, director at StepChange Debt Charity, highlighted the benefits and risks associated with buy now, pay later options. He stressed the importance of the new regulations in protecting consumers through affordability checks, ongoing support, and access to dispute resolution mechanisms. Tutton advised users to ensure repayments are manageable and seek assistance from organizations like StepChange if facing repayment challenges.