Millions of shoppers will soon benefit from enhanced protections as new rules for Buy-Now, Pay-Later (BNPL) products are set to be introduced. The Government has launched a consultation on proposals to bring BNPL companies under the supervision of the Financial Conduct Authority (FCA) and ensure the Consumer Credit Act safeguards users.
The new regulations aim to protect consumers from unaffordable borrowing and provide clearer information about loan agreements. BNPL companies will be required to assess shoppers’ ability to afford repayments before offering loans, reducing the risk of individuals falling into unmanageable debt.
In addition, companies must present loan agreements in a clear and accessible manner, helping consumers make informed decisions. If issues arise with purchases made through BNPL schemes, shoppers will have stronger rights to claim refunds from their lenders under Section 75 of the Consumer Credit Act and can seek redress through the Financial Ombudsman Service.
The consultation closes on 29 November, with final legislation expected to be laid in Parliament in early 2025. These new measures will take effect in 2026, bringing much-needed clarity to the sector after years of regulatory uncertainty.
This move follows the Prime Minister’s pledge to remove unnecessary regulation while ensuring consumers are protected from spiralling debt.