Key changes for Buy Now, Pay Later rules confirmed – and the exact date it comes into force
The Financial Conduct Authority (FCA) has announced that the long-awaited buy now pay later (BNPL) rules will come into force from 15 July 2026.
From then on, borrowers using services such as Klarna, Clearpay and PayPal’s ‘Pay in 3’ option will benefit from stronger protection.
BNPL allows users to split their payments into interest-free installments.
However, borrowers currently have very limited protection as the sector is not yet regulated by the FCA.
The government first announced that it would regulate BNPL in January 2021.
What’s changing?
After repeated delays, firms will soon be required to carry out affordability checks, offer support to customers in financial distress and provide borrowers with clear information about what they are agreeing to.
Importantly, if things go wrong, customers will be able to refer their complaints to the Financial Ombudsman Service. Lenders will only be allowed to continue providing BNPL if they are authorized by the FCA.
FCA deputy chief executive Sarah Pritchard said: “We want the Buy Now Pay Later sector to thrive – providing an important source of credit for many – and we will continue to support firms looking to develop innovative new products.
“But most importantly, loans should not be given to anyone who cannot repay them, as this could worsen their financial situation. Now parliament has given us powers, so we are imposing proportionate protections for the 11 million people who use it.”
The details were welcomed by debt charity StepChange, which has been campaigning for the regulation for several years. Peter Tutton, StepChange’s director of policy, research and public affairs, said:
“Buy Now, Pay Later can be a useful way for people to spread costs. But like any type of credit, it carries risks when repayments become difficult. The lack of FCA regulation so far has only increased the risk of financial harm for those relying on BNPL.”
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“We would urge anyone using BNPL to always double-check that repayments are available and if you are struggling to repay you can get free, impartial debt advice from charities such as StepChange.”
How to use buy now, pay later responsibly?
Used correctly, BNPL can be an affordable way to access credit. But it’s easy to overuse it and fall into unmanageable debt, especially since it’s still unregulated at the moment.
Before paying using BNPL, it’s a good idea to ask yourself whether you would still make the purchase even if Klarna, Clearpay or PayPal’s Pay in 3 were not available. This can help you figure out if you’re spending impulsively.
If you can’t afford the purchase without using BNPL, this may be an indication that you’ll have a hard time making your repayments. Missing payments can result in additional fees and damage your credit score.
Dr D., chief lecturer in marketing management at the University of Westminster. Donna Mai said: “Users should consider the timing and total impact of repayments as well as existing financial commitments, ensure sufficient funds are available and set reminders to prevent missed payments.”
He also recommends sticking with just one BNPL provider. “It is important to limit the number of simultaneous BNPL agreements, avoiding use across multiple providers where providers cannot carry out appropriate checks,” he said.
