UK enforces FCA regulations on Buy Now, Pay Later sector

Consumers using Buy Now, Pay Later (BNPL) services will now be covered by the same regulatory protections as other forms of consumer credit after new rules have come into force by the UK government on July 15.

The changes place BNPL providers, including Klarna, PayPal and Clearpay, under the supervision of the Financial Conduct Authority (FCA).

Under the new framework, providers are required to carry out affordability assessments before offering credit, while consumers purchasing faulty goods using BNPL will also gain the same rights to seek refunds as those paying via credit card or other credit products.

Customers facing financial difficulties will further be directed to debt support prior to debt collection measures.

The move addresses the unregulated nature of the BNPL market, which has rapidly expanded in recent years, having become a common payment option for online retail purchases.

Until now, the sector had operated outside of major regulations that typically apply to other consumer lending products. The UK government first announced plans to regulate the sector in 2024, with legislation then passed in 2025.

In a statement, Rachel Black, economic secretary to the Treasury, said: “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.”