Particle.news
Download on the App Store
16 ARTICLES
·
last mo.

UK Government Introduces Legislation to Regulate Buy Now, Pay Later Sector

New rules will require affordability checks, faster refunds, and ombudsman access, with enforcement beginning in 2026 under the Financial Conduct Authority.

Image
Image
Image

Overview

  • The UK government has formally introduced legislation to regulate the buy now, pay later (BNPL) sector, addressing concerns over unregulated lending practices.
  • The new rules mandate affordability checks, ensuring borrowers can repay loans, and provide consumers with faster refunds and access to the Financial Ombudsman for complaints.
  • BNPL firms will come under the supervision of the Financial Conduct Authority (FCA) and must adhere to the Consumer Credit Act, aligning with other credit products.
  • The legislation aims to curb excessive debt among the 10 million UK users of BNPL services, which have been described as operating in a 'wild west' environment.
  • Consumer advocacy groups, including Citizens Advice, and BNPL providers like Klarna and Clearpay have welcomed the regulations as a step toward enhanced consumer protections and industry growth.