How changes to ‘buy now, pay later’ rights affect you
The UK has introduced new rules for buy now, pay later (BNPL) lending, bringing it under Financial Conduct Authority regulation from Wednesday and giving shoppers protections similar to those attached to other forms of credit. The government says this ends the sector’s “wild west” era and should create a fairer deal for consumers, while campaigners still warn that people should think carefully before using it. The change matters because BNPL has become a common feature of online shopping and is increasingly used by millions of people for everyday and higher-value purchases.
Under the new regime, lenders must carry out affordability checks before each loan, provide clearer information about repayments and missed payments, and direct struggling borrowers towards debt advice before debt collection. BNPL users will also gain section 75 protection on purchases between £100 and £30,000, allowing claims against the lender as well as the retailer if something goes wrong. The sector grew from £60m in 2017 to more than £13bn in 2024, according to the FCA, while UK Finance says usage among UK adults rose from 14% to 25% in just one year. Major providers in the UK market include Klarna, Clearpay and PayPal, and missed payments can still lead to late fees and possible damage to credit files.
In short
- UK BNPL lending now faces stronger consumer regulation.
- Lenders must check affordability and give clearer information.
- Users gain section 75 protection on eligible purchases.
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The case for
The new regulations address genuine risks in a sector that has exploded from £60 million to £13 billion with virtually no oversight. Affordability checks, transparent information about repayments and the consequences of missed payments, and mandatory debt advice for struggling borrowers are basic consumer protections that apply to all other forms of credit. Section 75 protection ensures people have recourse when things go wrong, bringing fairness to a market where millions of people, many of them vulnerable, are increasingly making significant purchases through unregulated lenders.
The case against
BNPL's explosive growth reflects genuine consumer demand for a faster, simpler alternative to traditional credit that the previous light-touch approach enabled. The new regulations, whilst well-intentioned, will inevitably increase costs and bureaucratic friction that may price out the very people BNPL was designed to serve. Adults should be free to assess their own financial circumstances and make their own choices without mandatory affordability checks and paternalistic debt advice requirements; the unregulated market allowed innovation and competition that regulation risks stifling, whilst the sector's popularity suggests consumers found real value in its accessibility.
Explained simply
Buy now, pay later (BNPL) is a way of shopping where you split your purchase into multiple instalments instead of paying upfront. It has become increasingly popular for online shopping, from small everyday purchases to bigger buys, and is now used by one in four UK adults.
Previously, BNPL operated with minimal regulation, unlike credit cards and loans. The sector has grown rapidly from £60 million in 2017 to over £13 billion in 2024, with major providers including Klarna, Clearpay and PayPal. This growth with limited oversight prompted regulators to introduce new rules.
The new rules require BNPL lenders to check whether customers can afford their repayments and provide clearer information about what happens if payments are missed. Customers now have section 75 protection on purchases between £100 and £30,000, meaning they can claim against the lender if something goes wrong with their purchase, as they can with other forms of credit. Campaigners warn that people should still think carefully about using BNPL, since missed payments can result in late fees and damage to credit files.