Buy Now, Pay Later Is Now Regulated: What Changed

The "pay later" button has new rules behind it

This festive season is the first one where buy-now-pay-later comes with real consumer protections in the UK. Almost 11 million UK adults have used BNPL, according to industry reporting when the new rules landed — and since 15 July 2026, those tap-to-split purchases have been regulated by the Financial Conduct Authority. Here is what changed, and the gaps that remain.

What the regulator now controls

The rules cover deferred payment credit: interest-free credit repaid in instalments over 12 months or less, where the lender is a different business from the retailer. Any agreement of that type signed on or after 15 July 2026 falls under the FCA's consumer credit rules and its Consumer Duty. The FCA set out the final rules in Policy Statement PS26/1, published in February 2026, and five protections came into force on 15 July:

1. Affordability checks on every agreement. Lenders must assess whether you can afford the repayments — proportionate to the amount and your circumstances, regardless of the transaction value.
2. Authorisation. Firms must be FCA-authorised or registered under a temporary permissions regime (registration ran 15 May to 1 July 2026; firms have six months to apply for full authorisation). Offering this credit without permission is a criminal offence.
3. Clear information up front — payment dates, amounts, and what happens if you miss one.
4. Support if you struggle, the same duty that applies to other regulated credit.
5. Access to the ombudsman. If the provider doesn't resolve your complaint within eight weeks — or you reject their final answer — you can escalate to the Financial Ombudsman Service, free. That route did not exist for BNPL before July 2026.

The FCA says BNPL has "an important role to play" in consumer finance — but borrowing should be offered "in a way that works for consumers." Deputy chief executive Sarah Pritchard added that the regulator wants "the Buy Now Pay Later sector to thrive" while firms develop new products responsibly.

The affordability check: what it means at the checkout

The old model made "pay in 3" nearly instant and almost always approved. Now the lender must judge whether the repayments fit your finances before the credit is extended. If the check fails, the purchase is refused.

The check is proportionate — a small clothing order and a large furniture purchase are not treated identically — and the FCA has not prescribed one universal assessment, so lenders implement it differently. The one reliable outcome: checkout takes a little longer, and approval is no longer automatic.

Before vs after: what changed at the checkout

	Before 15 July 2026	Now (regulated)
Approval	Near-instant, almost always approved	Affordability check required; can be refused
Provider status	No authorisation needed	Must be FCA-authorised or temporarily permitted
Upfront terms	Varied by provider	Clear pre-contract information is mandatory
If you fall behind	Provider's own policies	Mandatory support for customers in difficulty
Disputes	No ombudsman route	Free ombudsman access after eight weeks
Faulty goods	Lender-refund rights not guaranteed	Section 75-style lender refund in some cases

Your rights when something goes wrong

Complain to the lender first. If eight weeks pass without a resolution, or you reject their final answer, the Financial Ombudsman Service will take your case for free — including whether the affordability check was done properly.

On faulty or undelivered goods, the FCA says that on regulated agreements you may be able to get a refund from the lender, the same kind of protection Section 75 of the Consumer Credit Act gives credit card users. But Section 75 does not apply automatically to every BNPL arrangement, so check your terms and ask the lender directly.

Five habits for the first regulated Christmas

The rules make BNPL safer, but it is still credit. Over the festive season, when "split it into 4" is designed to make you spend more:

1. Check the firm is authorised. Look providers up on the FCA's Firm Checker before borrowing from an unfamiliar name at checkout.
2. Only split what you could buy outright. BNPL is a cash-flow tool, not extra income — if the full price doesn't fit this month's budget, instalments won't fit next month's.
3. Keep one running list of open plans. Three or four "small" plans stack up fast; note each plan's payment dates and amounts in one place.
4. Watch the payment method behind the plan. A missed instalment can mean lender fees plus overdraft or card interest on the funding account.
5. Know the date of each plan. Agreements from before 15 July 2026 carry none of the new protections.

If you live in the US: where America stands

The UK regime is one of the world's most comprehensive BNPL frameworks, and a preview of where others are heading — the EU's revised Consumer Credit Directive expressly brings many BNPL schemes into consumer credit regulation. The United States has no equivalent federal regime: the CFPB has studied BNPL for years, but federal affordability-check and ombudsman-style protections for it do not exist as they now do in Britain. US shoppers should read the terms themselves, because nobody is checking affordability for them.

Frequently asked questions

Can a lender refuse my BNPL application now?

Yes — that is the point of the check. If the lender cannot satisfy itself that you can afford the repayments, it must not lend. A refusal is the protection working, not a reason to try five other providers.

My BNPL plan started in June 2026. Am I covered?

No. The rules only apply to agreements entered into on or after 15 July 2026. Older plans — including any still running today — stay under the old, unregulated terms, and the ombudsman cannot consider complaints about them.

Does Section 75 apply to my BNPL purchase?

In some cases, yes. The FCA says that on regulated agreements you may be able to claim a refund from the lender if something goes wrong with what you bought, just as with a credit card. It does not apply automatically to every arrangement, so check the terms and ask.

What if my provider is only "temporarily permitted"?

That is legitimate. Firms that registered between 15 May and 1 July 2026 can operate under the temporary permissions regime while applying for full authorisation — they have six months from the regime's start to apply. The conduct rules, checks and ombudsman access apply in the meantime.

The new checkout, in one sentence

Before you tap "pay later" this season, take the thirty seconds the old checkout never gave you: check the provider is authorised, read the repayment dates, and ask whether you could afford the full price today. The regulator can now force lenders to ask the same question — but the best affordability check is still your own.