Starting July, buy now, pay later customers will be subject to affordability assessments and provided with assistance in case of issues under enhanced safeguards. The buy now, pay later industry will fall under the regulation of the Financial Conduct Authority (FCA) from July 15, 2026. Users of buy now, pay later services will be required to receive transparent information upfront regarding their agreements, including payment schedules, amounts due, and consequences of missed payments.
Additionally, buy now, pay later lenders must conduct affordability checks to ensure customers can repay their borrowed amounts. Support services must also be available to aid customers facing financial challenges, directing them to free debt counseling if needed.
Customers using buy now, pay later services can raise complaints to the Financial Ombudsman Service (FOS) if they feel unfairly treated. Lenders will need authorization from the regulator and must adhere to Consumer Duty rules, which establish higher consumer protection standards in the UK financial sector. Firms will have six months from the enforcement date to seek full authorization.
While buy now, pay later enables spreading out purchase costs, concerns have been raised about potential debt accumulation beyond repayment capabilities. The FCA reported that the buy now, pay later market reached £13 billion in 2024, with 10.9 million adults utilizing such services in the preceding 12 months.
Sarah Pritchard, FCA’s deputy chief executive, emphasized the importance of responsible lending practices to prevent worsening individuals’ financial situations. She highlighted the introduction of proportionate protections for the 11 million buy now, pay later users following Parliament’s approval.
Peter Tutton, director at StepChange Debt Charity, acknowledged the utility of buy now, pay later in cost management but stressed the necessity of safeguards, including affordability checks, consistent support, and access to the Financial Ombudsman in case of adversities. Tutton advised users to ensure repayment feasibility and seek debt advice if facing repayment challenges.