UK watchdog calls for stricter regulations on buy now, pay later loans

The UK’s Financial Conduct Authority (FCA) has proposed more stringent regulations for Buy Now, Pay Later (BNPL) providers with the goal of supporting borrowers in the event of financial difficulties.

The organisation’s rules are set to come into force when BNPL falls under the oversight of the FCA by July 2026, a shift the watchdog and debt-related charities have long campaigned for.

In a statement, the FCA’s deputy chief executive, Sarah Pritchard, said: “Our regulation will help consumers navigate their financial lives, with checks on whether they can afford to repay, support when things go wrong and access the right information to make informed decisions.”

The FCA said related BNPL products will come “under proper regulation” in line with the rest of the consumer credit sector, requiring providers to ensure borrowers can afford repayments and offer backing where necessary.

Among the suggestions is that of an extension of Section 75 protections, which would make BNPL firms and retailers jointly responsible for faulty or undelivered goods, placing more responsibility on merchant partners.

Senior director of risk at Broadstone, Richard Pinch, said the move to tighten regulations will mean providers come under increased pressure to “enhance creditworthiness and affordability assessments and also demonstrate robust consumer protections”.

Pinch added: “This marks a significant shift away from the relatively light-touch model BNPL firms have operated under, and places greater emphasis on affordability checks, credit reporting and fair treatment of borrowers.”