Buy now, pay later consumers will now be subject to affordability assessments and will have access to assistance in case of issues under enhanced safeguards becoming effective from July. The sector 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 transparent, upfront information regarding their agreements. This information should outline payment deadlines, amounts due, and consequences for missed payments. Buy now, pay later lenders are also mandated to conduct evaluations to ensure borrowers can feasibly repay their loans. Support must be available for customers facing financial challenges, including guidance towards free debt counseling services.
Buy now, pay later users will have the option to lodge complaints with the Financial Ombudsman Service (FOS) if they believe they have been treated unfairly. Lenders will be required to obtain authorization from the regulator and adhere to Consumer Duty regulations, which establish higher levels of consumer protection within the UK financial services industry. Companies will have a six-month window from the implementation of the regime to apply for full authorization. While buy now, pay later offers a way for individuals to spread out payments, concerns have been raised about the potential for individuals to take on unmanageable debt.
The FCA reported that the buy now, pay later market expanded to £13 billion in 2024, with 10.9 million adults utilizing these services in the twelve months leading up to May 2024. Sarah Pritchard, the FCA’s deputy chief executive, expressed the importance of responsible lending practices in the buy now, pay later sector. Peter Tutton, director of policy, research, and public affairs at StepChange Debt Charity, highlighted the risks associated with buy now, pay later services and emphasized the significance of regulatory oversight to protect consumers. It is advised that individuals using buy now, pay later options ensure repayments are manageable and seek assistance from reputable debt advice organizations if needed.