BNPL Regulation Starts 15 July 2026: Your Complete Guide to New Buy Now Pay Later Consumer Rights

Why BNPL has been unregulated until now

Buy Now Pay Later products grew out of a gap in the regulatory perimeter that governs consumer credit in the United Kingdom. The Consumer Credit Act 1974 and the regulations made under it were designed primarily for traditional credit products such as credit cards and personal loans. BNPL agreements, which are interest-free and repayable in 12 or fewer instalments within 12 months, were structured in a way that placed them outside the regulated activities order, meaning BNPL providers faced no legal obligation to carry out affordability assessments, provide standardised pre-contract information or submit to FCA oversight.

This regulatory gap allowed BNPL to grow with exceptional speed. According to the FCA's 2024 Financial Lives Survey, the UK BNPL market expanded from approximately £60 million in 2017 to over £13 billion in 2024, a 216-fold increase in seven years. By the time of the survey, 10.9 million UK adults, representing around 20% of the adult population, had used BNPL in the preceding 12 months.

The absence of affordability checks created particular concern among consumer groups and debt charities. Unlike credit card applications, where lenders are required to check whether a borrower can afford the credit before approving it, BNPL providers could extend credit to customers who were already in financial difficulty with no mechanism in place to identify or prevent this. The FCA found through its Financial Lives surveys that repeat BNPL users were disproportionately represented among households experiencing financial strain.

The government legislated to bring BNPL within FCA regulation on 14 July 2025, using the Financial Services and Markets Act 2000 (Regulated Activities etc.) Order. The FCA published final rules in a Policy Statement in February 2026. The sector is formally designated in regulation as deferred payment credit, abbreviated to DPC.

The four core consumer protections from 15 July 2026

The FCA has built the new BNPL regulatory regime around four principal consumer protections that take effect for all new agreements from 15 July 2026.

The first protection is a requirement for clear pre-contract information. Before a customer enters into a BNPL agreement, the lender must provide upfront details of the payment schedule, the amounts due at each instalment, what happens if a payment is missed, and how the customer can contact the lender. This information must be presented clearly and accessibly, not buried in terms and conditions that are visible only after the agreement is concluded. The FCA has given firms flexibility on the precise presentation format, subject to meeting the outcome-based standards of the Consumer Duty.

The second protection is the requirement to conduct proportionate affordability and creditworthiness assessments. Under the FCA's Consumer Credit Sourcebook rules, which now apply to BNPL, lenders must check that a customer can afford to repay the credit before offering it. Critically, these checks must be carried out on every individual purchase, not just when a customer first opens an account with a BNPL provider. The affordability check requirement applies even for purchases below £50, a threshold that had been discussed during the consultation period as a potential de minimis exemption but which the FCA decided not to introduce.

The third protection is the extension of Section 75 of the Consumer Credit Act 1974 to BNPL agreements. Section 75 makes the credit provider jointly and severally liable with the retailer in cases where a retailer fails, goods are not delivered, or there is a misrepresentation about the product. The protection applies to purchases with a cash price between £100 and £30,000. For BNPL users, this means that if they purchase a product using BNPL and the retailer subsequently fails or fails to deliver the item, they can make a claim directly against the BNPL provider. Section 75 protection applies only to agreements made on or after 15 July 2026.

The fourth protection is access to the Financial Ombudsman Service. If a consumer has a complaint about a BNPL agreement that the lender has not resolved satisfactorily, they can refer it to the FOS for independent adjudication. The FOS can require lenders to compensate consumers where it finds they have been treated unfairly. FOS access applies only to complaints about agreements entered into from 15 July 2026 onward.

Support obligations for customers in financial difficulty

Beyond the four core protections, the new rules impose specific obligations on BNPL lenders when a customer misses a payment or is in financial difficulty. Lenders must notify the customer immediately if a payment is missed, explain clearly what is owed, set out the consequences of continued non-payment, and provide information about free debt advice services.

Where a lender identifies that a customer is in financial difficulty, the rules require the lender to consider offering forbearance. This might take the form of an extended repayment period, a payment holiday, or a waiver of fees or charges. The FCA has not prescribed the specific form that forbearance must take but has made clear that lenders are expected to treat customers in difficulty with appropriate flexibility rather than simply pursuing the outstanding balance.

Who the regulation covers and who is exempt

The FCA regulation applies to third-party BNPL lenders. These are firms that provide BNPL credit through merchants as a payment option at checkout, including Klarna, Clearpay, Laybuy and similar providers. Firms such as these are now required to be FCA-authorised or to be operating within the temporary permissions regime.

The regulation does not apply to retailers that offer their own deferred payment arrangements directly to customers, without using a third-party lender. These so-called first-party BNPL arrangements remain outside the regulated perimeter for now. The government has indicated it will monitor this segment and may bring it within regulation in a future phase.

The Financial Services Compensation Scheme does not cover BNPL activities, which is consistent with the treatment of most other consumer credit products. This means that if a BNPL lender fails, customers do not have the same FSCS protection that applies to bank deposits.

What BNPL users should do now

For consumers who use BNPL regularly, the 15 July 2026 date is a meaningful boundary. For purchases made before that date, the previous absence of consumer protection rules applies. For purchases made on or after 15 July 2026 through a regulated provider, the new rights including affordability checks, Section 75 protection and FOS access are in place.

Consumers should check whether their BNPL provider is authorised by the FCA or has registered for the temporary permissions regime. The FCA register at register.fca.org.uk allows anyone to check whether a firm is authorised. BNPL providers that are not authorised and have not entered the temporary permissions regime by 15 July 2026 will not be permitted to offer new BNPL agreements.

Any consumer with an existing complaint about a BNPL agreement made before 15 July 2026 should raise it directly with the provider. While FOS access is not available for pre-regulation agreements under the compulsory jurisdiction, some providers participate in the FOS voluntary jurisdiction for older complaints. If the complaint is not resolved, the county court is an alternative route.

How BNPL regulation compares to credit card rules

One of the significant practical effects of BNPL regulation is that the product now sits within a comparable framework to credit cards for most consumer protection purposes, despite remaining structurally different in several ways. This matters because millions of consumers routinely choose between credit cards and BNPL at the checkout without fully understanding how differently the two products were previously treated.

Credit cards have long been subject to the Consumer Credit Act 1974 in full, including Section 75 protection, the requirement for affordability assessment, and access to the Financial Ombudsman. BNPL lacked all three until 15 July 2026. The reform closes the most significant gaps, though differences remain. Credit cards are subject to the full range of CCA requirements including credit reference agency checks, annual percentage rate disclosure and a 14-day right to withdraw. BNPL regulation under the FCA's Consumer Credit Sourcebook is designed to be proportionate to the shorter-term, interest-free nature of the product, meaning some of the more detailed CCA requirements are adapted rather than replicated wholesale.

From the consumer's perspective, the most important practical equivalence created by the new rules is Section 75 protection and FOS access. A consumer who purchases a £500 item using a credit card has always had recourse against the card provider if the retailer fails. From 15 July 2026, the same consumer purchasing the same item using BNPL has equivalent protection for the first time. This is a meaningful upgrade in consumer rights for anyone who uses BNPL for significant purchases.

The impact on how BNPL providers operate at checkout

The practical implementation of the new rules will require BNPL providers and the merchants who offer BNPL at their checkouts to make changes to their customer journeys. The affordability check requirement in particular has implications for the speed and friction of the BNPL checkout experience, which has historically been one of the product's key commercial advantages over credit cards.

BNPL providers have invested significantly in real-time data analysis capabilities that allow them to conduct affordability assessments rapidly enough to avoid adding visible delay to the checkout process. Klarna, the largest BNPL provider operating in the UK, stated ahead of the regulation date that it was operationally ready and that its existing real-time assessment processes would meet the proportionate checks the FCA requires. Smaller providers may face more operational challenge in implementing compliant processes within the available timeline.

Merchants that accept BNPL at their checkouts are not themselves regulated under the new regime. The regulatory obligation falls on the BNPL lender. However, merchants have indirect obligations under consumer protection law to ensure that the combined checkout experience, including the BNPL disclosures provided at the lender's direction, is not misleading. Merchants with significant BNPL volumes are expected to review their checkout journeys in consultation with their BNPL providers to ensure compliance with the new disclosure requirements.

Frequently asked questions

Does Section 75 apply to BNPL purchases made before 15 July 2026?

No. Section 75 protection applies only to BNPL agreements entered into on or after 15 July 2026. Purchases made before that date under existing BNPL arrangements are not covered.

Can I complain to the Financial Ombudsman about an existing BNPL dispute?

FOS compulsory jurisdiction covers complaints about regulated BNPL agreements made from 15 July 2026. For older agreements, some BNPL providers participate in the FOS voluntary jurisdiction - check directly with the provider or the FOS.

Will BNPL affordability checks slow down the checkout process?

BNPL providers are required to conduct proportionate assessments. The FCA has not prescribed a specific method, giving firms flexibility to use real-time data analysis to complete checks quickly. Major providers including Klarna have stated they are operationally ready for the new requirements.

Are all BNPL providers covered by the new rules?

Third-party BNPL lenders, meaning firms that provide BNPL credit through merchants, must be FCA-authorised. Retailers that offer deferred payment directly to customers without using a third-party lender are currently exempt.

What is the temporary permissions regime?

BNPL providers that did not hold the necessary FCA consumer credit permissions could register for a temporary permissions regime between 15 May and 1 July 2026, allowing them to continue operating while their full authorisation application is processed. They then have six months from 15 July 2026 to obtain full authorisation.