Buy-now-pay-later rules are about to change. Here’s what we know
The UK’s buy-now-pay-later industry is about to change
- The UK's buy-now-pay-later (BNPL) sector, currently valued at £28 billion with nearly 23 million users, will face regulation by the Financial Conduct Authority from July 2026.
- New regulations will require BNPL lenders, including Klarna and PayPal, to conduct affordability checks, be more transparent about terms, establish complaint systems, and prove financial stability.
- The government says legislation aims to protect shoppers, end the 'wild west' of some BNPL schemes, and foster economic growth, addressing issues like late payment charges and debt layering.
- Concerns exist that strict regulation could lead to market dominance by major players, stifle innovation, and push vulnerable consumers towards more expensive credit options like overdrafts or payday loans.
- The success of the new rules is uncertain, with potential for unintended consequences such as responsible users facing barriers to managing essential expenses, or problems merely shifting rather than being solved.