New protections confirmed for Buy Now Pay Later borrowers

BNPL will be subject to the Consumer Duty and consumers will benefit from:

• Clear information: Consumers will get clear, upfront details about their agreement, including when payments will be due, amounts, and what happens if they miss a payment.
• Affordability checks: Lenders must carry out proportionate checks to make sure customers can afford to repay what they borrow before offering BNPL.
• Support when needed: Lenders will need to offer support to customers in financial difficulty, and, where appropriate, direct them to free debt advice.
• Complaints and compensation: If something goes wrong, consumers will be able to complain to the Financial Ombudsman Service.

BNPL provides an important source of credit for many, but there are no protections in place currently for those who use it repeatedly and may not be able to afford it. The aim of the new regulation is to help consumers navigate their financial lives, with appropriate support for consumers.

Sarah Pritchard, deputy chief executive at the FCA, said: 

'We want the Buy Now Pay Later sector to thrive – it provides an important source of credit to many – and we will continue to support firms who want to develop innovative new products. But crucially, no one should be lent to if they're unable to repay, because that could worsen their financial situation. Now Parliament has given us the powers, we’re putting in place proportionate protections for the 11 million people who use it.'

Lenders will need to be authorised by the FCA to provide BNPL. The FCA will provide pre-application support to these firms to help them get ready.

Notes to editors

• BNPL is a broad term which can include credit agreements that are already regulated. The final rules relate to unregulated BNPL agreements, which are defined as deferred payment credit (DPC) in the legislation and Policy Statement[1].
• Firms will be able to register for the temporary permissions regime between 15 May 2026 and 1 July 2026. Firms will have 6 months (from the date the regime comes into force) to apply for full authorisation. Find out more about what firms need to do[2].
• The BNPL market has grown significantly in recent years, from £0.06bn in 2017 to over £13bn in 2024. According to the FCA’s 2024 Financial Lives Survey[3], 20% of UK consumers (10.9 million adults) used it in the 12 months leading up to May 2024.
• Where consumers can afford to use BNPL, and it can work for them in the ways it’s meant to – for example, managing cash flow – they should be able to access it. While firms have a responsibility to check that consumers can afford to repay before offering BNPL, consumers should remember that BNPL is borrowing and make sure they can afford the repayments. If you’re struggling with money, you can get guidance on dealing with debt[4] from MoneyHelper. You can also use the Debt Advice Locator tool[5] to find free services in your area. Find out more about BNPL[6].
• Suppliers that provide their own credit will remain exempt from regulation. The exemption of 'merchant own credit' was a decision the Government made in 2024.