Buy now, pay later consumers will soon be subject to affordability assessments and will receive assistance in case of issues under enhanced safeguards set to take effect from July. The industry will fall under the oversight of the Financial Conduct Authority (FCA) starting on July 15, 2026. Following this date, individuals utilizing buy now, pay later services must be provided with transparent and upfront information regarding their agreements, including payment schedules, amounts due, and repercussions for missed payments.
Additionally, buy now, pay later lenders are required to conduct assessments to ensure that customers have the means to repay their borrowings. Support services must also be made available to customers facing financial challenges, directing them to free debt advice resources.
Users of buy now, pay later services will have the option to file complaints with the Financial Ombudsman Service (FOS) if they believe they have been treated unfairly. Lenders are mandated to obtain authorization from the regulator and comply with Consumer Duty regulations, which establish elevated standards of consumer protection within the UK financial sector.
Firms will be granted a six-month window from the commencement of the new regulations to apply for full authorization. While buy now, pay later allows for spreading out the cost of purchases, concerns have arisen in the past over the possibility of individuals taking on unmanageable debt.
The FCA reported that the buy now, pay later market reached £13 billion in 2024, with 10.9 million adults utilizing such services in the twelve months leading up to May 2024. Sarah Pritchard, the FCA’s deputy chief executive, emphasized the importance of ensuring that lending is only extended to those capable of repayment to prevent exacerbating their financial circumstances.
As the FCA now possesses the necessary authority, it is implementing proportionate safeguards for the vast number of individuals utilizing buy now, pay later services. The introduction of affordability checks, continuous lender support, and access to the Financial Ombudsman in case of issues are considered critical protective measures for borrowers relying on any form of credit.
Peter Tutton, director of policy, research, and public affairs at StepChange Debt Charity, noted the potential benefits of buy now, pay later for cost spreading but emphasized the risks associated with repayment difficulties. The absence of FCA oversight has heightened these risks, according to Tutton, making the new regulations essential in safeguarding borrowers.
Tutton advised individuals using buy now, pay later services to ensure they can afford the repayments and to seek free and impartial debt advice from organizations like StepChange if they encounter repayment challenges.
