Government confirms regulation of Buy-Now, Pay-Later from 2026

The UK government has officially announced that Buy-Now, Pay-Later (BNPL) services will become regulated starting from 2026 .

This has followed concerns about the risks associated with BNPL, particularly for vulnerable consumers. Buy-Now, Pay-Later is a way of purchasing items on credit and paying for them later or in instalments. Regulating BNPL means BNPL providers will have to follow new rules set by the government.

What will Buy-Now, Pay-Later (BNPL) regulation mean for consumers?

The proposed regulation will introduce important changes to protect people who use BNPL services:

• BNPL providers will have to clearly inform customers that BNPL is a form of debt. This will help people better understand the terms of their BNPL agreement.
• Providers must carry out proper affordability checks. This will help prevent people taking on more debt than they can manage.
• If there are any issues with their BNPL agreement, consumers will be able to seek assistance from the Financial Ombudsman Service.
• Consumers will be protected by Section 75 of the Consumer Credit Act. If someone spends between £100 to £30,000 with BNPL and the product is faulty, they’ll be able to claim the cost back through their BNPL provider.

A welcome move for consumer protection

The decision to regulate BNPL services has been welcomed by many. Our in-house compliance manager, Lauren Taylor, says:

“The government’s decision to regulate the BNPL sector is a timely one.

We can see how the cost-of-living crisis has led people across the UK to take on more debt, so it’s important that the right support is in place to protect the customer.

Affordability checks will reduce the chances of people taking on debt they can’t afford to repay. The improved transparency will make customers more aware of the risks, as many don’t realise BNPL can affect your credit score.”

When will this happen?

The regulation is planned to start in 2026. However, there are calls for Buy-Now, Pay-Later providers to work closely with the Financial Conduct Authority (FCA) to bring these changes in sooner. The sooner these changes are in place, the better it will be for consumers who may be at risk of falling into further debt.

What can you do in the meantime?

It’s important to be aware of the potential risks associated with Buy-Now, Pay-Later (BNPL) services, especially until the regulation comes into effect. Here are some steps you can take to protect yourself:

• Make sure you can afford the payments before using BNPL.

• Read the terms and conditions thoroughly to understand what happens if you miss a payment, and if there are any other fees.

• Keep track of your BNPL commitments and payment dates to avoid falling behind.
• If you find yourself struggling with BNPL debt, get in touch with your BNPL provider, or seek help from debt advice services.

If you’re considering using this form of lending, you can read our article on whether BNPL is worth it for more information.

Remember, if you’re struggling with any form of debt, you can get free, confidential advice from a professional debt specialist. Visit Money Wellness, StepChange, Citizens Advice, National Debtline, or MoneyHelper to find out more.