New BNPL rules could make shoppers pause before they pay

The era of near-invisible checkout credit is set for a major reset, as previously unregulated Buy Now Pay Later (BNPL) products come under the Financial Conduct Authority’s oversight.

The new rules will apply to Deferred Payment Credit agreements, meaning lenders will need to carry out affordability checks, provide clearer information on repayment terms and fees, support customers in financial difficulty, and give consumers access to the Financial Ombudsman Service if something goes wrong.

Discussing the upcoming changes, Theresa Lindsay, Chief Marketing Officer at Novuna Consumer Finance, said”Buy Now Pay Later can be a valuable way for consumers to spread the cost of larger, planned purchases; however, some unregulated products have become so seamless that borrowing can feel almost invisible for smaller everyday purchases.

“These reforms are a positive step towards ensuring credit is used responsibly. Introducing greater transparency and affordability assessments will help consumers better understand the commitments they’re taking on and make informed borrowing decisions. This is important for everyday spending, where the ease of accessing credit can sometimes encourage purchases that may not fit within a customer’s budget. The changes should help create a more consistent and responsible lending environment, while preserving the established benefits for retailers and customers that Buy Now Pay Later can offer for big-ticket items.”

The reforms come amid rapid growth in checkout credit. FCA figures show the BNPL market reached more than £13bn in 2024, while 10.9 million adults used BNPL in the 12 months to May 2024.

From 15th July, consumers who enter previously unregulated Buy Now Pay Later (BNPL) agreements will be able to bring eligible complaints to the Financial Ombudsman Service (FOS) if they are unable to resolve the issue directly with their provider.

Consumers will need to complain to their Buy Now Pay Later provider first, and if they are unhappy with the response, they can submit a complaint through the Financial Ombudsman Service’s online portal.

Consumers will need to provide some simple details about the lender and the nature of the complaint. The Financial Ombudsman Service will then assess the evidence, considering the terms and conditions of the credit agreement and the relevant law and regulations.

Complaints about Buy Now Pay Later may include whether the lending was affordable, whether the consumer understood the agreement, or if the items paid for were of the expected quality.

The Financial Ombudsman has been working closely with the Financial Conduct Authority (FCA) to ensure that it has the right processes and resources in place to handle complaints.

Consumers will be able to take a complaint to the Financial Ombudsman Service as long as the complaint is about agreements taken out on or after 15th July 2026 and if the complaint is about a regulated firm.

James Dipple-Johnstone, Interim Chief Ombudsman for the Financial Ombudsman Service said “This is an important step for consumers who use Buy Now Pay Later. If something goes wrong and they cannot resolve the issue with their provider, they now have access to our free and impartial service.

“As new financial products become part of everyday spending, it is vital that consumer protection keeps pace. We have worked closely with the FCA to make sure we are ready to handle these complaints fairly and efficiently and have engaged with firms to ensure they understand our approach.”