Buy Now Pay Later falls under Financial Conduct Authority oversight for the first time, from 15 July, bringing affordability checks and complaint rights to a market used by around 11 million people. The specialists who submitted comment broadly welcomed the change, though not all agreed it settles the matter.

Buy Now Pay Later (BNPL) products come under Financial Conduct Authority (FCA) regulation for the first time. Lenders offering what the rules call deferred payment credit will have to carry out affordability checks, set out fees and repayment terms clearly, support customers who fall into difficulty, and give borrowers access to the Financial Ombudsman Service if an agreement goes wrong. From the same date, providers must be authorised by the FCA or operate under its temporary permissions regime.

The change closes a gap that has been open for years. BNPL looks and feels like a payment method at the checkout, yet it is a credit agreement, and until now it has sat outside the rules that apply to other forms of borrowing. The direction was set by the Woolard Review in February 2021, which recommended the sector be brought into regulation. The FCA published its final rules in February 2026, in policy statement PS26/1, confirming the 15 July start date.

The market has grown quickly in that time. FCA figures put BNPL lending at more than 13bn pounds in 2024, up from around 60m pounds in 2017, with 10.9 million adults, one in five, using it in the year to May 2024. That growth is the backdrop against which the specialists who submitted comment weighed the reform, and they did not all read it the same way.

For providers already inside the regulatory fold, the change reads as a levelling of standards. “These new rules are a big win for the millions of people using BNPL in the UK,” said Ruth Spratt, UK Country Manager at Affirm. “Consistent standards give people greater confidence when they choose to use BNPL, which is why we’ve not only supported regulation from the get-go, but go beyond the rules by never charging late fees, a policy other lenders should adopt.”

Theresa Lindsay, Chief Marketing Officer at Novuna Consumer Finance, which already operates under FCA rules, framed the reform around transparency. “Buy Now Pay Later can be a valuable way for consumers to spread the cost of larger, planned purchases, however some unregulated products have become so seamless that borrowing can feel almost invisible for smaller everyday purchases,” she said. “By introducing greater transparency and affordability assessments, they will help consumers better understand the commitments they’re taking on and make informed borrowing decisions.”

Others welcomed the rules but were quick to mark their limits. Dani Palmer, Consumer Finance Expert at Loqbox, described the arrival of regulation as a moment to take stock of what it will and will not fix. Her concern was that many borrowers, particularly younger ones, do not treat BNPL as credit at all. “Unlike a traditional loan or credit card application, it’s typically presented as just another payment option at checkout,” she said. “One purchase split across four payments sounds manageable; five purchases split across four payments each is a different story.” Even with clearer information and affordability checks, she added, BNPL “can still snowball into debt that’s harder to manage than people expect.”

The sharpest question came from Santosh “San” Nakra-Shah, Co-Founder and Managing Partner at ChilliMint Europe, who agreed the reform was overdue but argued the debate around it was incomplete. She pointed to estimates from Fair4All Finance that the stricter affordability checks could exclude between 10 and 30 per cent of current users, at a point when BNPL has moved well beyond discretionary spending. “BNPL was built for the want- not-need purchases, the trainers, the gadget, the 80 pound dress you talk yourself into,” she said. “The issue is it’s now supporting far more routine spending, like groceries, school uniforms and energy bills.” Around 1.6 million people have used credit, including BNPL, to help cover everyday bills, she noted.

Her point was about where that demand goes once it is turned away. “Demand for short-term credit won’t disappear when BNPL becomes harder to access, so are we solving the problem, or just moving it somewhere less visible?” she said. “That need for quick, flexible credit doesn’t evaporate just because access tightens. It goes looking for a new front door, and people don’t always choose a safer one once theirs closes.”

The reform gives borrowers protections they did not have before, and, for the first time, a route to the Financial Ombudsman Service. It does not, on the evidence of the commentary submitted here, resolve what happens to those who no longer pass an affordability check. Firms have six months from 15 July to apply for full authorisation, and the FCA has said it will watch how the market adapts as the rules take hold.

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