Stronger protections for buy now, pay later customers are set to be introduced in July, requiring affordability checks and offering support in case of issues. The Financial Conduct Authority (FCA) will start regulating the sector from July 15, 2026, ensuring that users receive transparent information upfront about their agreements, including payment schedules and consequences of missed payments.
Buy now, pay later lenders will be mandated to assess customers’ ability to repay their borrowings. Additionally, assistance will be provided to individuals facing financial troubles, guiding them to free debt advice services.
Users of buy now, pay later services will have the right to escalate complaints to the Financial Ombudsman Service (FOS) if they believe they have been treated unfairly. Lenders must seek authorization from the regulator and comply with Consumer Duty rules, which enhance consumer protection standards in the UK financial sector.
The buy now, pay later market expanded to £13 billion in 2024, with 10.9 million adults utilizing these services in the preceding 12 months. The FCA emphasized the importance of ensuring responsible lending practices to prevent individuals from taking on unmanageable debts.
Sarah Pritchard, FCA’s deputy chief executive, emphasized the need for proportionate safeguards to protect the millions of buy now, pay later users. Peter Tutton from StepChange Debt Charity highlighted the risks associated with buy now, pay later services and stressed the importance of affordability checks and ongoing support for borrowers.
Moving forward, customers are advised to carefully assess the affordability of repayments and seek assistance from reputable debt advice organizations if needed.