Starting from July, customers using buy now, pay later services will be subjected to affordability assessments and will receive enhanced support in case of issues. The sector will be regulated by the Financial Conduct Authority (FCA) effective from July 15, 2026. Users of buy now, pay later schemes will be provided with transparent information upfront, detailing payment schedules, amounts due, and repercussions for missed payments.
Moreover, buy now, pay later lenders are mandated to conduct checks ensuring borrowers have the means to repay their debts. Assistance will also be offered to customers facing financial challenges, including guidance towards free debt counseling services.
Furthermore, individuals utilizing buy now, pay later options will have the right to raise complaints with the Financial Ombudsman Service (FOS) if they feel unfairly treated. Lenders must obtain authorization from the regulator and adhere to Consumer Duty regulations, which elevate consumer protection standards in the UK financial industry.
The buy now, pay later market expanded to £13 billion in 2024, with 10.9 million adults utilizing such services in the preceding 12 months. Sarah Pritchard, FCA’s deputy chief executive, emphasized the importance of responsible lending practices to prevent worsening borrowers’ financial conditions.
Peter Tutton, director at StepChange Debt Charity, highlighted the risks associated with buy now, pay later schemes and welcomed the regulatory safeguards. He advised users to ensure affordability of repayments and seek assistance from organizations like StepChange in case of financial difficulties.