The UK government has unveiled a set of new regulations to safeguard consumers who utilise Buy Now Pay Later (BNPL) services.
The move aligns with the government’s intention to put an end to what it describes as the unregulated “Wild West” of borrowing.
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From 2026, BNPL companies will be mandated to adhere to uniform standards to ensure that consumers are fully aware of the commitments they make when they split their payments, including their ability to afford the repayments and avenues for assistance should issues arise.
Stipulations include obligatory preliminary checks to verify a consumer’s capability to repay borrowed sums, improved and expedited processes for refunds, and the provision for consumers to lodge complaints with the Financial Ombudsman service.
This alignment with other credit offerings is designed to strengthen rights and enhance protections for more than 10 million people.
According to HM Treasury, BNPL usage has surged by two million users over the past three years. BNPL schemes are considered a valuable instrument for responsible financial management among users.
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By GlobalDataRecent findings from a survey by the UK’s Financial Conduct Authority (FCA) indicate a notable increase in BNPL usage. Key findings from the FCA’s Financial Lives May 2024 survey show that the most prevalent form of non-regulated lending in 2024 was BNPL.
20% of the adult population – around 10.9 million individuals, had utilised this financing option between May 2024 and May 2025 – up from 17%, or 8.8 million users, recorded in 2022.
The adoption of deferred payment credit was notably high among specific demographics, with lone parents using such services at a rate of 40%. Usage rates stood at 35% among females aged between 25 and 34 years old, and 26% within the Black adult community.
These changes are expected to reinforce consumer trust while simultaneously providing providers with the stability to foster innovation, expansion and investment.
UK treasury economic secretary Emma Reynolds stated: “Buy Now Pay Later has transformed shopping for millions, but for too long has operated as a Wild West – leaving consumers exposed.
“These new rules will protect shoppers from debt traps and give the sector the certainty it needs to invest, grow and create jobs through our Plan for Change.”
The changes are supported by fresh reforms to the Consumer Credit Act, which are set to overhaul a regulatory framework that has been in place for half a century.
The updated framework will eliminate archaic and perplexing regulations and transition oversight responsibilities to the FCA’s more adaptable regulatory system.
