Government delivers fairer deal for shoppers as Buy-Now, Pay-Later rules come into force

• Consumers who want a refund for faulty goods will now have the same clear, enforceable rights as they would with any other regulated financial product.
• Buy-Now, Pay-Later firms must now carry out affordability checks before offering credit, ensuring no one borrows what they cannot realistically repay.

Millions of shoppers using Buy-Now, Pay-Later services will be better protected by new rules that have come into force today (15 July), delivering on a commitment this government made to end the Buy-Now, Pay-Later Wild-West.  

Buying items with providers like Klarna, PayPal or Clearpay can be a useful tool to help people manage their finances, allowing consumers to spread the cost of purchases interest-free, typically at the point of online checkout. However, for too long, Buy-Now, Pay-Later users have had fewer rights than someone buying the same item with a credit card or a personal loan when seeking a refund after buying faulty goods.

From today, Buy-Now, Pay-Later products will now be regulated by the Financial Conduct Authority (FCA), giving consumers protections in line with other forms of credit. We are making regulation consistent to align with other credit products, to benefit consumers to ensure it is always used responsibly, protecting the millions of people who use it whilst ensuring checks are quick and seamless, so responsible Buy-Now, Pay-Later users shouldn’t face any added friction or delays. 

Under the new rules, providers must carry out affordability checks before offering credit, meaning no one should be borrowing what they cannot realistically afford to repay, helping people avoid getting into avoidable, unaffordable debt.

Consumers seeking a refund for faulty goods will now have clear, enforceable rights to claim one and anyone who falls into financial difficulty will be directed towards debt advice and support first, rather than being immediately handed to a debt collector.

Rachel Blake, Economic Secretary to the Treasury, said:

We made a clear promise to give consumers the protections they deserve and today we are delivering.

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.

Martin Lewis, Founder of MoneySavingExpert.com said:

Buy Now Pay Later done right, isn’t wrong. It’s fine for those who understand what they’re doing and make an active, one-off decision to use it to spread the cost over a few months interest-free.

Yet too many don’t do that. They fall for BNPL’s ubiquity, use it constantly and build up a bank of unaffordable debt. Worse, not everyone knows it’s a debt. That is why it has been unsafe for some, and why I was one of those who campaigned strongly for the government to bring in this regulation, and why I’m delighted to see it happening now.

Most people won’t notice any difference. These changes are primarily to ensure BNPL is sold responsibly and that there are protections for when things go wrong, which can be hugely damaging. These protections importantly include being able to appeal to the independent, free Financial Ombudsman Service over problems such as if your credit file is wrongly marked, or if BNPL has been mis-sold rather than properly explained as a debt.

Rocio Concha, Director of Policy and Advocacy at Which?, said:

Which? campaigned for regulation of Buy Now Pay Later (BNPL) providers such as Klarna and Clearpay, so it’s great news that this is finally happening and means users of these services will benefit from stronger safeguards. Key changes include access to the Financial Ombudsman Service if something goes wrong, as well as clearer information at checkout and affordability checks to help prevent people from taking on debt they can’t afford. Before choosing BNPL, shoppers should consider whether they can comfortably afford the repayments and understand the consequences of missing them. Regulation should make those decisions easier by ensuring people have clearer information and stronger consumer rights.

Vikki Brownridge, Chief Executive Officer at StepChange Debt Charity, said:

Whilst BNPL can be a useful tool for spreading the cost of large expenses – our insight tells us those who use it are much more likely to be experiencing debt problems, putting them at risk of harm. Following years of campaigning by StepChange and others across the sector, we welcome these new consumer protections. Bringing BNPL products into line with other consumer credit products is an important step that will give borrowers stronger safeguards and greater confidence.

Alison Walters, director of consumer finance at the FCA, said:

Millions of people use Buy Now Pay Later and, from today, they will have stronger protections. Consumers will benefit from affordability checks, clearer information, and greater support if they get into difficulty. They’ll also be able to complain to the Financial Ombudsman Service if something goes wrong. Our regulation will make sure people can continue to benefit from this type of borrowing; have the information they need to make informed decisions and the protections to help avoid unmanageable debt.

Lilly Aaron, Senior Policy Manager and Buy Now Pay Later Lead, Money and Pensions Service said:

Buy Now Pay Later can be a useful way to manage spending, but it is still a form of borrowing so should be used carefully. The new FCA rules will give consumers greater protection, including stronger affordability checks, and will help ensure people can make informed decisions about credit. As with any other form of credit, when using Buy Now Pay Later, consumers should always check they can comfortably afford the repayments, avoid taking on multiple agreements they may struggle to keep track of, and make sure they are aware of when payments are due. For more free and impartial support and guidance on BNPL and everyday money management, visit MoneyHelper.

The Buy-Now, Pay-Later sector has grown rapidly in recent years, with millions of people — including many on lower incomes — using Buy-Now, Pay-Later products as part of their everyday spending. Until now, users have not received the key protections that apply to other forms of credit. 

The government announced its intention to regulate Buy-Now, Pay-Later in October 2024 and passed legislation in July 2025 to make new rules come into force in 2026.  Today’s announcement marks the delivery of that commitment, with the FCA now responsible for overseeing the sector.