Buy now, pay later consumers will soon be subject to affordability assessments and offered assistance in case of issues as part of enhanced safeguards set to take effect in July.
Starting from July 15, 2026, the industry will fall under the regulation of the Financial Conduct Authority (FCA). Individuals utilizing buy now, pay later services will be required to receive transparent information upfront regarding their agreements, including payment due dates, amounts owed, and consequences of missed payments.
Additionally, buy now, pay later lenders will be mandated to conduct checks to ensure borrowers have the capacity to repay their loans. Support services will be available for customers facing financial challenges, directing them to free debt advice resources.
Users of buy now, pay later services will have the right to file complaints with the Financial Ombudsman Service (FOS) if they believe they have been treated unfairly. Lenders must obtain authorization from the regulator and adhere to Consumer Duty regulations, which establish heightened consumer protection standards in the UK financial sector.
Firms will be given a six-month window from the enforcement date to apply for full authorization. While buy now, pay later enables individuals to spread out payment obligations, concerns have been raised in the past about potential debt issues arising from this practice.
The FCA reported that the buy now, pay later market expanded to £13 billion in 2024, with 10.9 million adults utilizing these services in the 12 months leading up to May 2024.
Sarah Pritchard, FCA’s deputy chief executive, emphasized the importance of ensuring that individuals are not extended credit they cannot afford to repay. The FCA aims to provide appropriate protections for the significant number of consumers engaging in buy now, pay later transactions.
Peter Tutton, director at StepChange Debt Charity, acknowledged the benefits of buy now, pay later but highlighted the associated risks, particularly in the absence of prior FCA oversight. Going forward, consumers using these services will benefit from affordability checks, continuous support from lenders, and recourse to the Financial Ombudsman in case of problems.
It is advised that individuals utilizing buy now, pay later services carefully assess the affordability of repayments and seek assistance from impartial debt advice organizations like StepChange if faced with repayment challenges.
