Millions of shoppers may find it harder to complete online purchases after July 15, 2026, when tough new rules for buy now, pay later (BNPL) services come into effect. The regulations, enforced by the Financial Conduct Authority (FCA), require lenders to conduct affordability checks for every transaction, potentially blocking those deemed unable to repay.
Key Changes Under FCA Regulation
Starting July 15, BNPL providers such as Klarna, Clearpay, and PayPal must be authorised by the FCA. They will be legally obliged to run proportional credit and affordability checks on each purchase, not just when an account is opened. If a customer is found to have excessive debt or likely to struggle with payments, the BNPL agreement will be refused.
The FCA emphasised that consumers should receive clear, upfront details about repayment schedules, amounts, and consequences of missed payments. Lenders must also offer support to those in financial difficulty and direct them to free debt advice. Additionally, customers can complain to the Financial Ombudsman Service if issues arise.
Section 75 Protection Extended
From July 15, any BNPL agreement on items costing between £100 and £30,000 will grant shoppers joint liability with the retailer if a product is faulty or never delivered—matching the protection offered by standard credit cards.
Industry and Consumer Reactions
Sarah Pritchard, deputy chief executive at the FCA, said: “We want the BNPL sector to thrive, but no-one should be lent to if they’re unable to repay. Now Parliament has given us the powers, we’re putting in place proportionate protections for the 11 million people who use it.”
Peter Tutton of StepChange Debt Charity welcomed the changes: “Going forward, people using BNPL will be protected by affordability checks, consistent support, and access to the Ombudsman. These are essential safeguards.”
Rocio Concha from Which? noted: “Which? has campaigned for years for BNPL regulation. Clearer information, proper affordability checks, and redress should give shoppers proper protections.”
Vix Leyton, consumer expert at thinkmoney, called the move “absolutely right,” while Anne Pardoe of Citizens Advice said: “These protections couldn’t come soon enough.”
Clearpay and Klarna both welcomed the regulation, with Klarna stating it “will raise standards across the market.” UK Finance also endorsed the move.
Market Context
The BNPL market exceeded £13 billion in 2024, with 20% of UK consumers (10.9 million adults) using it in the 12 months to May 2024, according to the FCA’s Financial Lives Survey.
