New buy now, pay later rules will give shoppers ‘better protection’, ombudsman says
Now buy, pay later, a consultation put forward by the Financial Behavior Authority (FCA), he says that people should check that they can repay their loans.
Providers should also provide support if customers enter the financial difficulty in further protection described by FCA.
Borrowers will be able to complain about the financial ombudsman service if something goes wrong.
The rules that provide more transparency about what this kind of borrowing contains to consumers will now come into force when purchased, and then the payment (BNPL) is in charge of FCA next year.
FCA’s new supervision will mean that BNPL borrowers will have already existing basic protections for other types of lending.
FCA also supervises the consumer duty that requires financial firms to put consumers at the center of what they do, including communication with their customers.
FCA Deputy General Manager Sarah Pritchard said: ik We have wanted to bring BNPL products to our task for a long time, so that people can benefit from BNPL while protecting it.
“Our arrangement will help consumers to walk around in their financial lives by checking whether they can afford to pay back, whether they will support them when things go wrong, and access the right information to make conscious decisions.
“We rely on the existing requirements, including the consumer task, mostly, instead of making a large number of new rules, supporting growth and allowing companies to innovate.”
BNPL products are a way to spread purchasing costs without paying interest. BNPL options are regularly opened in online cases.
However, concerns that some people could receive loans that they could not pay back on time and may cause charges.
According to FCA’s research, one of the five (20%), which was equal to five 10.9 million, used BNPL at least once in 12 months by 2024 in 2022 in 2022.
In May 2024, 2% of the UK adults (equal to 1.1 million) had £ 500 or more irregular BNPL debt, and 11% of the UK adults (5.3 million) were not paid £ 50 or more.
FCA’s consultation is open for feedback by September 26, 2025.
Two months before the regime entered into force on July 15, 2026, the temporary leave regime will be open to companies.
Later, companies will have six months from the date of applying the regime to full authorization.
FCA said that BNPL is a wide term that can include some already regulated credit agreements.
New offers are related to irregular BNPL agreements called postponed payment loans (DPC).
The government made legislation to take DPC products under FCA regulation.
DPC refers to the interest -free loan that finances purchase of goods or services and can be repaired in 12 or less installments in 12 months or less.
Only the Layers that provide DPC lends do not need to be FCA authorized at the moment, which leads to concerns that some debtors cannot get enough information about the inclusion of credit agreements.
In FCA, Alison Walters, the Temporary Manager of Consumer Finance, said to the PA news agency: ız Our offers aim to ensure that consumers get good consumer results and make a suitable consumer protection.
“And with this, we mean that consumers have obtained the right information correctly at the right time, so that they can make a conscious decision about their purchase, and then compromised.”
“What we ask in our rules is that companies have an affordable price control to ensure that consumers can pay. And if they experience financial difficulties to provide appropriate support.
“We also want them to give more information about late wages if they miss the payment, and if they can affect their credit ratings, for example.
“And also information about the rights of withdrawal and cancellation.”
“If something goes wrong, consumers will be able to direct their complaints to the Financial Ombudsman Service.”
Walters, in terms of supporting financial challenges: “In accordance with our current rules, firms may tolerate consumers if they experience financial difficulties.”
He said that this may include changes in the payment plan and that people can be pointed out by debt advice or other support mechanisms.
Under new rules, Walters added, “We still think this market will be applicable and profitable,” he added.
He pointed out that the BNPL market has already grown in size and popularity.
According to the regulator, DPC loans grew more than £ 13 billion in 2024 in 2017 in 2017.
A spokesman for a Klarna said: “After five years of constructive works with HMT (HM Treasury), we enter the house directly to make BNPL regulation reality – a big win for the UK consumers.
“We are looking forward to working with FCA on the rules that protect consumers while maintaining elections and innovation at the center of the UK credit market.”
BNPL provider in Clearpay said: “While consulting FCA to the sector and we will conclude its special rules for the sector.”
The Sözcü said that the regulation will “create a consistent operating environment and open compliance standards for all providers:“ Clearpay Research believes that almost half of the UK adults (48%) is more likely to use BNPL after the regulation has passed, and that BNPL will be important for the financial season of England.
“In addition, since it continues to grow as a daily payment option for consumers, it will create a more sustainable basis for the future of BNPL.”
Vikki Brownridge, General Manager of StepChane Debt Assistance Authority, said, “FCA is now incredibly reassuring to see consultancy on the approach that it proposed to regulate purchase.
“While BNPL can be a useful budgeting tool, it can deepen debt problems and important to consumers at the same level as other credit forms.
“Making BNPL companies suitable for the wider credit market, when the arrangement starts next year, a change that will provide an additional layer of protection for consumers, a very needed change, found that all credit users are twice as possible for BNPL users to cover the basic bills of BNPL users, and now found that BNPL is now as common as an extreme use of adults.
Vix Leyton, a consumer expert in the App Thinkmoney, said Bnpl may be a truly useful tool when you pay an unpredictable cost that directs a destruction ball through your budget.
“However, it can eliminate pressure while spreading the cost, and a temporary relief if it is not responsible and carefully done.”
“It is vital to stop kicking the financial box in order to enable people to understand the consequences of the abducted payments of those who are financially vulnerable.”
Rocio Concha, which? Politics and defenders director said: “Now buy, then payment may be a really appropriate way to spread the cost of products, but it has not been risk -free for consumers because it has not yet been regulated.
“The regulation will mean that consumers will be subject to reasonable price controls in order to provide responsible loans and provide sufficient information about the risk of loans and debt.”
