From July 15 2026, buy now, pay later (BNPL) services will be regulated by the Financial Conduct Authority (FCA), requiring lenders to carry out proportionate affordability checks and provide clearer information to customers. The change affects major online retailers including ASOS, boohoo, Gymshark, H&M, Nike, Selfridges, Charlotte Tilbury, Apple, Dyson, Currys, IKEA, Very, Booking.com, Trainline, and Cult Beauty.
Scope and Scale of BNPL Usage
Personal finance expert Laura Pomfret explained on BBC Morning Live that BNPL usage has skyrocketed. Spending on BNPL rose from £60 million in 2017 to £13 billion in 2024, according to the FCA. The FCA's 2024 Financial Lives survey found that one in five UK consumers (10.9 million adults) used BNPL in the 12 months prior.
Problems with Unregulated BNPL
Pomfret noted that many consumers do not realize they are borrowing when using BNPL. “They see it in the checkout. It’s just a payment method. You don’t actually realise you’re borrowing to pay for that item,” she said. She also warned of “loan stacking,” where users accumulate multiple BNPL agreements across different providers, building up debt unknowingly. Affordability checks have not been universal, leading to debt that consumers cannot afford. Repayment rates and timings have also been unclear.
New Protections Under FCA Regulation
Under FCA supervision, BNPL firms must provide clear, upfront details about agreements, including payment due dates, amounts, and consequences of missed payments. Lenders must conduct proportionate affordability checks before offering BNPL. Firms must also support customers in financial difficulty and direct them to free debt advice. Consumers will have access to the Financial Ombudsman Service (FOS) if something goes wrong.
Impact on Consumers
Pomfret said some heavy users may suddenly find themselves refused or face extra steps at checkout. “For people on tight budgets, it is going to make sure that you can afford it,” she said. Occasional users may see little difference if they can afford the repayments. Sarah Pritchard, deputy chief executive at the FCA, stated: “We want the buy now, pay later sector to thrive... But crucially, no-one should be lent to if they’re unable to repay because that could worsen their financial situation.”
Industry and Advocacy Response
Rocio Concha, Which? Director of Policy and Advocacy, said: “Which? has campaigned for years for BNPL to be regulated and clearer information, proper affordability checks and access to redress when things go wrong should give shoppers proper protections.” A Clearpay spokesperson said: “We welcome regulation, which will establish a consistent operating environment and clear compliance standards for all providers.” A Klarna spokesperson added: “These new rules will raise standards across the market.” A spokesperson for UK Finance said: “It’s right that the product is regulated and our members welcome the application of more flexible regulation through the FCA.”
