Starting July, buy now, pay later customers will be subject to affordability assessments and provided with assistance in case of issues, as stronger safeguards take effect. The industry will be regulated by the Financial Conduct Authority (FCA) beginning July 15, 2026, requiring clear disclosure of payment terms, amounts due, and consequences of missed payments.
Buy now, pay later lenders must conduct affordability checks to ensure borrowers can repay their loans. Additionally, they must offer support to customers facing financial challenges, directing them to free debt advice services.
Users of buy now, pay later services will have recourse to the Financial Ombudsman Service (FOS) for grievances. Lenders must seek authorization from the regulator and adhere to Consumer Duty regulations, which elevate consumer protection standards in the UK financial sector.
The buy now, pay later market reached £13 billion in 2024, with 10.9 million adults utilizing such services in the preceding 12 months. Authorities aim to foster growth in the sector while prioritizing responsible lending practices to protect consumers from financial distress.
Sarah Pritchard, FCA’s deputy chief executive, emphasized the importance of preventing lending to financially vulnerable individuals. She highlighted the new safeguards put in place to benefit the 11 million buy now, pay later users.
Peter Tutton, from StepChange Debt Charity, recognized the benefits of buy now, pay later but cautioned about the risks, especially without prior FCA oversight. Moving forward, consumers will benefit from enhanced protections, ensuring affordability checks, ongoing support, and access to dispute resolution mechanisms.
It is advisable for buy now, pay later users to verify repayment affordability and seek assistance from organizations like StepChange if facing difficulties.