Millions of UK shoppers who rely on Buy Now, Pay Later (BNPL) services to spread the cost of purchases are set to gain significant new protections from mid-2026, the Financial Conduct Authority (FCA) has announced.
In a statement on Wednesday (11 February), the regulator revealed that BNPL, the popular interest-free instalment option used at checkouts for everything from fashion to furniture, will come under full FCA regulation starting 15 July 2026.
This follows the government’s decision to bring previously unregulated “deferred payment credit” into the regulatory fold, ending years of light-touch oversight for a sector that has exploded in popularity.
Around 11 million UK adults, roughly 20% of consumers, according to the FCA’s 2024 Financial Lives Survey, used BNPL in the 12 months to May 2024. The market has ballooned from just £60 million in 2017 to more than £13 billion in 2024, driven by providers like Klarna, Clearpay, Laybuy and others.
Until now, BNPL has operated with minimal consumer safeguards compared to traditional credit cards or loans. Borrowers have had limited recourse if things went wrong, and there were no mandatory affordability checks for repeated or larger uses. The new rules aim to change that while allowing the sector to continue thriving.
Key changes coming in July 2026
From 15 July 2026 (dubbed “regulation day” by the FCA), BNPL lenders must:
- Be fully authorised by the FCA to offer these products – or register under a temporary permissions regime running from 15 May to 1 July 2026, giving firms six months to complete full authorisation.
- Comply with the Consumer Duty, requiring them to put customers’ needs first, deliver good outcomes, and avoid foreseeable harm.
- Carry out proportionate affordability checks before approving BNPL agreements, to ensure borrowers can realistically repay without getting into difficulty – especially important for those using BNPL repeatedly.
- Provide clear, upfront information, including exact payment schedules, amounts due, dates, and what happens if payments are missed (such as potential fees or credit score impacts).
- Offer support for customers in financial difficulty, including forbearance measures and signposting to free debt advice services like those from MoneyHelper.
- Allow complaints to be escalated to the Financial Ombudsman Service (FOS) for independent resolution, and open the door to potential compensation.
- In many cases, provide Section 75 protection for purchases over £100 (up to £30,000), making providers jointly liable with retailers if goods or services go wrong – though this applies only to new agreements from July onwards.
“BNPL provides an important source of credit for many, but there are no protections in place currently for those who use it repeatedly and may not be able to afford it. Now Parliament has given us the powers, we’re putting in place proportionate protections for the 11 million people who use it,” said Sarah Pritchard, Deputy Chief Executive at the FCA.
What this means for shoppers
For the average user, the changes should mean safer borrowing without losing the convenience that has made BNPL so popular. You may notice slightly stricter checks at checkout for some providers, particularly if you’ve used BNPL frequently or have multiple active plans.
But the FCA stresses the checks will be “proportionate” – lighter for small, one-off uses – to avoid slowing down the quick, seamless experience.
If you’re already using BNPL, existing agreements made before 15 July 2026 won’t automatically gain the new protections (like Section 75), but future ones will. Anyone struggling with repayments should contact their provider early, as enhanced support obligations kick in.
The overhaul has been welcomed by consumer groups as a step towards better protection in a fast-growing market, though some in the industry have warned of potential costs or friction for providers adapting to the new regime.
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