The UK government has announced stricter regulations for Buy Now, Pay Later (BNPL) providers, aiming to protect consumers from potential financial harm. The new rules will require BNPL firms to conduct affordability checks and provide clearer information to customers.
What's Changing for BNPL Services?
Under the proposed regulations:
- Lenders must perform affordability assessments before approving loans
- Clearer risk warnings must be displayed at checkout
- Advertising must not be misleading about repayment terms
- Customers will have formal complaint rights through the Financial Ombudsman Service
Why the Crackdown?
The move comes amid growing concerns that easy-access credit could lead vulnerable consumers into debt spirals. Recent data shows BNPL usage has surged, particularly among younger shoppers who may not fully understand the repayment obligations.
Financial Conduct Authority chief Nikhil Rathi stated: "These changes will ensure BNPL products have the right safeguards while maintaining their convenience for responsible borrowers."
Industry Reaction
Major BNPL providers have welcomed the clarity but warned that excessive regulation could limit access to credit. Some consumer groups argue the measures don't go far enough, calling for full FCA authorisation of all providers.
The new rules are expected to come into force by mid-2025, giving firms time to adapt their systems and processes.
