Starting July, buy now, pay later users will face more stringent safeguards, including affordability assessments and access to assistance in case of issues. The Financial Conduct Authority (FCA) will regulate this sector as of July 15, 2026, ensuring transparent disclosure of payment terms, due dates, amounts, and consequences of missed payments.
Lenders of buy now, pay later services will be required to verify customers’ repayment capability and provide support in case of financial distress, directing them to free debt advice services. Users will have the option to escalate complaints to the Financial Ombudsman Service (FOS) if they feel unfairly treated.
To operate, lenders must be authorized by the regulator and adhere to the Consumer Duty rules, enhancing consumer protection in the UK financial industry. They have a six-month window to seek full authorization once the regulations are enforced.
Although buy now, pay later offers flexibility in spreading expenses, concerns have been raised about potential debt risks. The FCA reported a market growth to £13 billion in 2024, with 10.9 million adults utilizing these services in the preceding 12 months.
Sarah Pritchard, FCA’s deputy chief executive, emphasized the need for responsible lending practices to prevent worsening financial situations. Peter Tutton, from StepChange Debt Charity, highlighted the importance of affordability checks, ongoing support, and access to avenues like the Financial Ombudsman for user protection.
Moving forward, users must ensure repayment affordability and seek assistance if needed, reinforcing the necessity of responsible borrowing practices.
