Buy Now Pay Later Is Now Regulated: What the FCA's New Rules Mean For You

Buy Now Pay Later (BNPL) — used by an estimated 17 million UK consumers to spread the cost of everything from clothing to electronics — is entering a new regulatory era. On 15 July 2026, the Financial Conduct Authority (FCA) brings BNPL formally into the UK regulatory perimeter for the first time. This is the biggest change to consumer credit law in a generation.

What Changes on 15 July 2026

Before now, BNPL products exploited a loophole in the Consumer Credit Act 1974, meaning providers like Klarna, Clearpay, and Laybuy operated without FCA authorisation and without the protections that come with it. That ends this month.

From Regulation Day, 15 July 2026, every firm offering interest-free deferred payment credit must either hold FCA authorisation or join the Temporary Permission Regime, which grants a six-month window to apply for full authorisation. Firms that fail to do either must stop offering BNPL.

The FCA's new rules require:

Affordability checks. Before approving any BNPL agreement, lenders must carry out proportionate affordability and creditworthiness assessments. You can no longer be approved in seconds with no income check. This mirrors the process for credit cards and personal loans.

Clear information upfront. Lenders must tell you, in plain terms, the total amount owed, the payment schedule, and the consequences of missing a payment — before you commit.

Financial hardship support. Regulated firms must have processes to support customers who fall into difficulty, including payment deferrals and signposting to free debt advice.

Access to the Financial Ombudsman. Perhaps the most significant consumer right: if things go wrong, you can now complain to the Financial Ombudsman Service (FOS), which can award compensation and order firms to put things right. Previously, BNPL disputes had no such independent arbiter.

Section 75 Protection — With a Catch

Section 75 of the Consumer Credit Act makes lenders equally liable for purchases between £100 and £30,000. Under the new rules, BNPL will carry this protection — but only for agreements made from 15 July 2026 onwards. Existing BNPL balances are not covered retrospectively.

This is a major step forward. In the US, BNPL remains largely unregulated at the federal level, though the Consumer Financial Protection Bureau (CFPB) has pushed for similar protections. Australia brought BNPL under its National Consumer Credit Protection Act in 2024.

What This Means in Practice

For consumers, the changes provide a safety net that never existed before. If a BNPL firm collapses, or if goods are not delivered and the retailer refuses to refund, you now have legal recourse. Late payment fees must be reasonable and clearly disclosed. Debt collection must follow FCA rules on fair treatment.

For merchants, firms using BNPL checkout integrations will need to ensure their payment provider is operating under either a full FCA authorisation or temporary permission. If you're an online retailer, your BNPL partner should have contacted you about this — if they haven't, check their regulatory status on the FCA register.

What to Watch From 15 July

Not all firms will make the deadline. The FCA has warned that firms not in the Temporary Permission Regime by 1 July 2026 cannot legally continue offering BNPL from Regulation Day. If your preferred BNPL provider disappears from a checkout, this is likely why. Established players like Klarna and Clearpay are expected to be ready; smaller or newer entrants may not be.

Check any active BNPL plans you have and make a note of the repayment dates. The new rules don't cancel existing agreements, but they do mean that if you run into trouble, support obligations now apply.

Key Numbers

• 15 July 2026: FCA Regulation Day for BNPL
• 17 million: estimated UK consumers who have used BNPL
• £100–£30,000: purchase range covered by Section 75 protection
• 6 months: window for firms in the Temporary Permissions Regime to apply for full FCA authorisation

Sources

• FCA: New protections confirmed for BNPL borrowers
• Hogan Lovells: BNPL FCA final rules for 15 July 2026 go-live
• Credit Strategy: BNPL comes under UK regulation from July 2026
• FCA: Regulating Buy Now Pay Later

Educational content only — not financial advice.