Millions of shoppers using Buy Now Pay Later (BNPL) services such as Klarna and Clearpay will see new rules take effect from July 15, 2026. The UK is overhauling the system to give customers better protection against falling into severe debt. From mid-July, BNPL providers will come under the Financial Conduct Authority's (FCA) oversight for the first time.
Enhanced Consumer Protections
Under the new regulations, BNPL firms must conduct affordability assessments, offer help to customers in financial hardship, and allow complaints to be referred to the Financial Ombudsman Service if issues arise. Jonathan Chesterman, debt advice policy manager at StepChange, explained: "If something goes wrong, shoppers have the right to complain to the BNPL provider. If shoppers don't receive a satisfactory response, they can then approach the Financial Ombudsman Service, which is free and objective." Previously, unresolved complaints would have required court action under contract law. Shoppers will also receive clearer information about their commitments and the consequences of missed payments.
Affordability Checks
The exact nature of affordability checks remains uncertain, but Chesterman suggested there "should be warnings" or a calculator at checkout to transparently show repayment obligations. He added: "The key thing is lenders will have to do something, whether that's asking the customer or a more detailed assessment of income and outgoings." These checks address "two big problems": the absence of credit checks allowing people in difficulty to take on more debt, and cases where clients had over 30 BNPL agreements without tracking their total owed.
Impact on Existing Agreements
Any BNPL arrangements entered into before July 15 will not be covered by the new rules. Shoppers managing multiple BNPL debts are advised to review their agreements and understand their repayment schedules. The new regulations aim to reduce the number of shoppers pushed into debt by excessive BNPL use. Those struggling with debt are urged to seek free advice from Citizens Advice, which helps with unexpected costs, late fees, and debt collector contact.
