Millions of Britons using Buy Now Pay Later (BNPL) services will soon come under the protection of the UK’s financial regulator, as the Financial Conduct Authority (FCA) rolls out plans to tighten oversight of the fast-growing lending sector.
Under proposals published on Friday, BNPL lenders such as Klarna and Clearpay will be required to check that customers can actually afford to repay what they borrow—bringing them in line with rules that apply to credit cards and personal loans.
Borrowers will also be entitled to support if they hit financial trouble, and will be able to take complaints to the Financial Ombudsman Service. The new rules are set to come into effect when the sector is formally brought under the FCA’s remit in 2026.
“We’ve long argued that BNPL should be regulated,” said Sarah Pritchard, the FCA’s deputy chief executive. “These new proposals are about giving people the benefit of flexible payments while making sure they’re protected.”
The regulator isn’t reinventing the wheel. Instead of introducing an entirely new rulebook, it plans to apply existing standards—like the Consumer Duty, which already governs other credit providers. That means BNPL firms will be expected to act fairly, avoid causing foreseeable harm, and help customers make informed decisions.
The FCA’s intervention comes amid a surge in BNPL usage. Nearly 11 million adults in the UK—roughly one in five—used BNPL in the year to May 2024, up from 8.8 million two years earlier, according to the regulator’s own figures. The trend has been particularly strong among younger consumers, drawn to the promise of interest-free instalments for everything from clothing and electronics to groceries and holidays.
While BNPL proved convenient for many, critics warned it can blur the line between spending and borrowing. Without affordability checks or consistent disclosures, some users racked up debts they couldn’t easily manage.
Consumer groups have long pushed for the FCA to step in. Their calls gained traction after the 2021 Woolard Review, which urged urgent action to regulate what was then an entirely unregulated market.
Until the new rules take effect, the FCA says a temporary permissions regime will allow existing providers to continue operating—as long as they start following its rules and begin the process of getting authorised.
The watchdog is now inviting views from lenders, consumer advocates, and industry players. The consultation will remain open until September 26, 2025, after which final rules are expected to be confirmed.
“This isn’t about stifling innovation,” Pritchard added. “We’re focused on sensible protections, while still letting the sector grow.”