The UK's finance landscape has undergone a significant overhaul with the introduction of new regulations for Buy-Now, Pay-Later (BNPL) services, effective from 15 July 2026. The long-awaited reforms aim to bridge the regulatory gap between BNPL and other financial products, offering users similar protections and rights.
Under the previous system, shoppers using BNPL platforms such as Klarna, PayPal, or Clearpay often found themselves disadvantaged in recourse compared to those paying with credit cards or personal loans. The new framework brings these services under the remit of the Financial Conduct Authority (FCA), ensuring a more consistent regulatory landscape across the credit sector.
The new rules mandate BNPL providers to conduct affordability checks, designed to prevent individuals from taking on excessive debt. This measure is expected to have a tangible impact, with estimates suggesting that around 7 million consumers will benefit from enhanced protection. Furthermore, consumers seeking refunds for faulty goods now possess clear and enforceable rights, simplifying the process of claiming their money back.
The regulations also introduce a more supportive approach for users facing financial difficulties. Instead of immediate referral to debt collectors, individuals will first be signposted towards debt advice and support services. This aims to provide a safety net and prevent vulnerable consumers from spiralling into deeper financial distress.
Rachel Blake, Economic Secretary to the Treasury, highlighted the government's commitment, stating, "It is not fair that people using these products have had fewer rights than if they had paid by credit card. These new rules protect the consumer — with proper checks before credit is offered, real rights when things go wrong, and support rather than pressure if someone falls into financial difficulty." Rocio Concha, Director of Policy and Advocacy at Which?, also welcomed the changes, highlighting the importance of access to the Financial Ombudsman Service for resolving disputes, including issues like incorrect credit file markings or mis-selling.