On 15 July 2026, Buy Now, Pay Later (BNPL) services in the UK come under formal Financial Conduct Authority (FCA) regulation. Providers including Klarna, Clearpay, PayPal, Zilch and Laybuy will need to be authorised by the regulator to continue operating. For the first time, BNPL will sit within the same regulatory perimeter as credit cards and personal loans — including Consumer Duty obligations, affordability checks and access to the Financial Ombudsman Service.
According to the FCA's 2024 Financial Lives Survey, 20% of UK adults — around 10.9 million people — used BNPL in the 12 months to May 2024. The market was worth an estimated £13 billion in 2024, making it one of the fastest-growing segments of UK consumer credit.
What changes on 15 July 2026
| Change | Detail |
|---|---|
| Affordability checks | Mandatory before every loan — even on purchases under £50 |
| FCA authorisation | Providers must be authorised or in the Temporary Permissions Regime (TPR) |
| Clear checkout information | Upfront disclosure of repayment terms, missed-payment charges and credit impact |
| Section 75 protection | Joint liability with retailers for purchases £100–£30,000 |
| Financial Ombudsman Service | BNPL users can escalate complaints for the first time |
| Consumer Duty | BNPL firms must deliver good outcomes, fair value and vulnerable-customer support |
Key dates for providers
- 15 May 2026 — Temporary Permissions Regime opens. Firms already operating on 15 July 2025 can apply for temporary permission to continue trading while the FCA reviews their full application.
- 1 July 2026 — Deadline to register for the Temporary Permissions Regime.
- 15 July 2026 — Regulation takes effect. Unauthorised BNPL lending becomes illegal.
- 15 January 2027 — Six-month window closes for authorised firms to secure full authorisation.
What it means for consumers
The headline change for consumers is that BNPL will finally carry the same protections as other forms of credit:
- Section 75 claims — if a retailer fails to deliver or the goods are faulty, the BNPL provider is jointly liable for purchases between £100 and £30,000.
- Financial Ombudsman Service — free, independent escalation if your BNPL provider refuses a reasonable complaint.
- Affordability checks — Clearpay research found that 48% of UK adults say they are more likely to use BNPL once it is regulated, and 71% think regulation is important.
- Potentially more declined applications — harder affordability tests mean some applications that would have been accepted before will now be declined.
BNPL usage skews young: 25–34-year-olds are the most likely age group to use BNPL regularly. Usage is also rising in financially stretched households where flexible payments can seem like the only option. The FCA has specifically cited protecting consumers who cannot handle the debt load as the priority.
What the providers say
Klarna has welcomed the move, saying the new rules will raise standards across the market. Clearpay has similarly welcomed a consistent operating environment. UK Finance, the banking and finance trade body, has said the application of flexible regulation through the FCA is the right approach for the product.
What it means for retailers and brokers
The British Retail Consortium has asked for clarity on how the new checkout rules will affect the user journey — a concern during peak shopping periods. For intermediaries and finance brokers that distribute BNPL alongside other credit products, the change brings BNPL firmly into the scope of standard consumer credit compliance. Brokers arranging BNPL will need to ensure the lender is FCA-authorised (or in the TPR) from 15 July 2026 onwards.
If you are struggling with BNPL debt
StepChange Debt Charity, Citizens Advice and MoneyHelper offer free, confidential debt advice. The Debt Respite Scheme (Breathing Space) gives eligible individuals a legal 60-day pause on enforcement and interest for most consumer debts, including BNPL balances in many circumstances.
Disclaimer
This article is for general information only and does not constitute financial, legal or regulatory advice. BNPL terms, interest rates and eligibility vary by provider. If you are struggling with debt, seek free advice from StepChange, Citizens Advice or MoneyHelper before taking on further credit.
FAQ
Will BNPL still be interest-free after regulation?
Most BNPL products are structured as short-term interest-free credit and that structure is not changed by the new rules. Missed payments and late fees still apply according to each provider's terms.
Will BNPL affect my credit score after regulation?
Potentially yes. Regulated BNPL providers are expected to report to UK credit reference agencies, meaning repayment history will show up on your credit file.
What happens if my BNPL provider does not get FCA authorisation?
They will not legally be able to offer new BNPL credit in the UK from 15 July 2026. Existing balances will still need to be repaid under the original terms.
