Buy now, pay later consumers will be subject to affordability assessments and will have access to assistance in case of issues under enhanced safeguards set to take effect in July.
Starting July 15, 2026, the buy now, pay later sector will fall under the regulation of the Financial Conduct Authority (FCA). Individuals utilizing buy now, pay later services must be provided with transparent and detailed information regarding their agreements, including payment schedules, amounts due, and repercussions of missed payments.
Additionally, buy now, pay later lenders will be required to conduct assessments to ensure that customers have the means to repay their borrowings. Adequate support must be extended to customers facing financial challenges, with guidance available for free debt advice.
Users of buy now, pay later services will have the option to escalate complaints to the Financial Ombudsman Service (FOS) in cases of perceived unfair treatment. Lenders will need regulatory authorization and will be held to the standards outlined in the Consumer Duty rules, which elevate consumer protection measures within the UK financial services industry.
Firms will have a six-month window from the enforcement date to apply for full authorization. While buy now, pay later enables individuals to spread out payments for purchases, concerns have been raised about potential debt burdens beyond their means to repay.
In 2024, the buy now, pay later market expanded to £13 billion, 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 exacerbating financial distress among consumers.
Peter Tutton, director at StepChange Debt Charity, highlighted the benefits of buy now, pay later in managing costs but cautioned about the risks associated with repayment challenges. He stressed the necessity of regulatory protections, including affordability checks, ongoing support from lenders, and access to the Financial Ombudsman for resolution.
For individuals considering buy now, pay later, it is advised to ensure affordability of repayments and seek assistance from organizations like StepChange in case of financial difficulties.
