The UK Government is set to introduce long-awaited regulation of the buy now, pay later (BNPL) market, aiming to curb what it describes as a “wild west” of unregulated lending. The legislative reform will modernise the outdated 50-year-old Consumer Credit Act, giving millions of consumers stronger protections and bringing BNPL in line with other credit products.
Scheduled to be laid in Parliament on 19 May, the new rules will enforce upfront affordability checks, guarantee quicker and fairer refund processes, and allow BNPL users to escalate complaints to the Financial Ombudsman. Regulatory oversight of the sector will also be transferred to the Financial Conduct Authority (FCA).
The urgency for reform follows a recent FCA report indicating that one in ten consumers have struggled to pay essential bills, with BNPL usage growing rapidly over the past three years. The government says the changes will eliminate confusing and outdated rules and create a clearer, safer borrowing environment.
Tom MacInnes, Director of Policy at Citizens Advice, welcomed the move but urged the FCA to move swiftly in establishing strong consumer safeguards. He noted that many consumers have fallen into unaffordable debt due to the lack of clear regulation, often needing emergency support such as food bank assistance.
The regulation marks a pivotal moment for consumer credit reform in the UK, with the government prioritising swift implementation in light of growing financial vulnerabilities.