Starting from July, buy now, pay later customers will be subject to affordability assessments and will receive assistance in case of issues under enhanced safeguards. The buy now, pay later industry will fall under the oversight of the Financial Conduct Authority (FCA) starting on July 15, 2026. Beginning on this date, individuals utilizing buy now, pay later services must be provided with clear and transparent information about their agreements, including payment schedules, amounts due, and consequences of missed payments.
Furthermore, buy now, pay later lenders will be required to conduct assessments to ensure that customers have the means to repay their borrowings. Support services will also be mandated for customers facing financial challenges, directing them to available debt advice resources.
Users of buy now, pay later services will have the option to raise complaints with the Financial Ombudsman Service (FOS) if they believe they have been treated unfairly. Lenders must obtain authorization from the regulator and adhere to Consumer Duty regulations, which establish heightened consumer protection standards within the UK financial sector.
The buy now, pay later market expanded to £13 billion in 2024, with 10.9 million adults utilizing these services in the preceding 12 months. Sarah Pritchard, the FCA’s deputy chief executive, emphasized the importance of responsible lending practices to prevent exacerbating individuals’ financial circumstances. She highlighted the FCA’s commitment to implementing proportionate safeguards for the millions of buy now, pay later users.
Peter Tutton, director at StepChange Debt Charity, acknowledged the benefits of buy now, pay later for managing expenses but cautioned about the associated risks, particularly when repayments become challenging. He emphasized the necessity of regulatory protections, including affordability assessments, ongoing support, and access to resolution mechanisms in case of issues. Tutton advised individuals using buy now, pay later services to verify the affordability of repayments and seek assistance from reputable debt advice organizations if needed.