Buy Now, Pay Later: How It's Changing (and Being Regulated) in 2026

Buy Now, Pay Later (BNPL) has grown from a niche checkout option into a UK market worth billions of pounds, largely without the consumer protections that apply to other forms of credit. That changes from 15 July 2026, when the FCA begins regulating it directly. Here’s exactly what’s changing.

Why BNPL has been unregulated until now

The specific type of BNPL agreement most people use - known technically as Deferred Payment Credit (DPC), interest-free and repayable in 12 or fewer instalments over 12 months or less - has sat outside FCA regulation, meaning providers didn’t need authorisation and consumers lacked the standard protections that apply to regulated credit like credit cards, personal loans, or the price-capped payday lending market.

What changes from 15 July 2026

• Mandatory affordability checks before agreeing to lend, proportional to the amount and the consumer’s situation - not just at account opening, but for each purchase.
• FCA authorisation required for providers, bringing them in line with other consumer credit providers, with a temporary permissions regime allowing existing providers to continue operating while completing the authorisation process.
• Clear, upfront information before you confirm a purchase - the amount borrowed, repayment dates, repayment amounts, and what happens if you miss a payment.
• Section 75 protection on qualifying purchases between £100 and £30,000, the same protection that applies to credit card purchases - meaning you can hold the BNPL provider jointly responsible if something goes wrong with the purchase (a faulty item, or a retailer that disappears).
• Access to the Financial Ombudsman Service if a dispute with a provider isn’t resolved fairly.
• Support obligations if you’re struggling - providers must have policies for customers in financial difficulty, including signposting free debt advice.

What’s not covered by the new rules

• In-house store credit schemes, where the retailer itself is both the seller and the credit provider, rather than a separate BNPL company - these remain outside the new regulation.
• Agreements taken out before 15 July 2026 - these remain unregulated for their full term, even if you’re still repaying them after the new rules take effect.
• Longer-term BNPL-style credit already regulated separately - some BNPL products with terms longer than 12 months or 12+ instalments were already within existing consumer credit regulation before this change.

Why regulators pushed for this change

The BNPL market grew from roughly £60 million in 2017 to over £13 billion by 2024, with FCA research finding that a significant share of users - particularly younger and more financially vulnerable consumers - were taking on multiple simultaneous agreements without fully understanding the cumulative impact. Research cited in coverage of the reforms suggested only around 37% of 18-34 year olds could repay their BNPL debts easily, compared with 60% of 35-54 year olds, and that a meaningful share of users were using credit cards to fund BNPL repayments - effectively converting supposedly interest-free credit into interest-bearing debt.

What this means practically for BNPL users

• Some applications that would previously have been approved may now be declined, as providers apply more rigorous affordability checks - this is a deliberate feature of the reform, not an unintended consequence.
• Missed payments will be more consistently recorded and reported, potentially affecting your credit file in ways that were previously inconsistent across different BNPL providers.
• You’ll have stronger recourse if something goes wrong with a purchase made via BNPL, similar to existing credit card protections.

Using BNPL responsibly, regardless of the new rules

Regulation improves the safety net around BNPL, but it remains a form of borrowing - missed payments can still affect your finances and credit file, and the ease of splitting purchases across multiple providers can make it easy to lose track of total commitments. Keeping a clear running total of active BNPL agreements, rather than treating each one in isolation, remains good practice regardless of the new protections.

The bottom line

From 15 July 2026, BNPL becomes a properly regulated form of credit, with affordability checks, clearer information, and genuine consumer protections that were previously absent. This is a meaningful improvement for consumers, but it doesn’t change the basic reality that BNPL is still borrowing, and stacking multiple agreements across different retailers remains a real risk worth actively managing.