Consumers using buy now, pay later services will soon experience enhanced protections starting in July. The Financial Conduct Authority (FCA) will begin regulating this sector from July 15, 2026. Individuals utilizing buy now, pay later services must be provided with transparent information upfront, including payment schedules, amounts due, and consequences of missed payments.
Furthermore, buy now, pay later lenders are required to conduct affordability checks to ensure customers can meet their repayment obligations. Support services will be made available to assist customers facing financial challenges, such as guiding them to free debt advice resources.
Users of buy now, pay later services will have the option to lodge complaints with the Financial Ombudsman Service (FOS) if they feel unfairly treated by lenders. These lenders must obtain authorization from the regulator and adhere to Consumer Duty regulations that establish higher consumer protection standards within UK financial services.
The buy now, pay later market expanded to £13 billion in 2024, with 10.9 million adults utilizing these services in the past year. Sarah Pritchard, FCA’s deputy chief executive, emphasized the importance of ensuring lending is responsible to avoid worsening individuals’ financial situations. Peter Tutton from StepChange Debt Charity highlighted the risks associated with buy now, pay later services and emphasized the necessity for affordability checks and consistent support for borrowers.
Moving forward, customers using buy now, pay later services are set to benefit from increased safeguards to prevent financial harm. It is advised for users to verify the affordability of repayments and seek debt advice if facing difficulties.