How will Buy Now Pay Later changes affect you?

New rules governing the buy now, pay later industry will come into force next month, bringing the rapidly growing but largely unregulated sector under the supervision of the Financial Conduct Authority for the first time. Here is what the changes mean for the millions of Britons who use the services.

The most significant change is that BNPL providers will be required to conduct affordability checks before approving purchases, a requirement that already applies to credit cards and personal loans but has been absent from the BNPL market. Providers will need to verify that a customer can afford the repayments, not just that they have not defaulted in the past.

The rules will also give consumers access to the Financial Ombudsman Service, meaning they can challenge unfair treatment and seek compensation. Currently, BNPL customers have no statutory right to complain to an independent body, a gap that consumer groups have described as the most serious deficiency in the existing framework.

Section 75 protection — which makes credit card companies jointly liable when something goes wrong with a purchase — will be extended to BNPL transactions. This is a significant change that means customers who buy faulty goods or services using BNPL will have the same rights as those who use credit cards.

The new rules will also require BNPL providers to report to credit reference agencies, meaning that missed payments will affect credit scores and that responsible use of BNPL can help build a credit history. Providers have been given a transition period to implement this requirement.

The FCA estimates that the changes will affect approximately 14 million UK adults who have used BNPL services. The regulator has warned that some providers may exit the market rather than comply with the new rules, and that consumers may find fewer BNPL options available at checkout as a result. But it argues that the benefits of regulation — fewer people falling into problem debt, greater transparency and stronger consumer protections — justify the consolidation.