Starting July, customers using buy now, pay later services will undergo affordability assessments and receive enhanced protections. The sector will fall under Financial Conduct Authority (FCA) oversight from July 15, 2026. Users must be provided with clear, upfront information about their agreements, including payment schedules, amounts due, and consequences of missed payments.
In addition, buy now, pay later lenders will be required to conduct checks to ensure borrowers can afford repayments. Support services will be available to assist customers facing financial challenges, including guidance towards free debt advice.
Customers will also have the option to escalate complaints to the Financial Ombudsman Service (FOS) if they feel unfairly treated. Lenders must obtain authorization from the regulator and adhere to Consumer Duty rules, which elevate consumer protection standards in the UK financial sector. Firms will have a six-month window from the implementation date to seek full authorization.
Although buy now, pay later allows individuals to spread out the cost of purchases, concerns have been raised about potential debt burdens. The FCA reported that the buy now, pay later market reached £13 billion in 2024, with 10.9 million adults utilizing these services in the preceding 12 months.
Sarah Pritchard, the FCA’s deputy chief executive, emphasized the importance of ensuring responsible lending practices to prevent worsening financial situations for borrowers. She highlighted the regulatory measures designed to safeguard the millions of people using buy now, pay later services.
Peter Tutton, director at StepChange Debt Charity, acknowledged the benefits of buy now, pay later as a way to manage expenses but cautioned about the risks associated with repayment difficulties. He emphasized the significance of the newly introduced safeguards, including affordability checks and consistent support for consumers.
Moving forward, individuals utilizing buy now, pay later services are encouraged to verify the affordability of repayments and seek assistance from organizations like StepChange if facing financial challenges.