New By Now Pay Later regulations from July 2026
Written by
Alicia Hempsted
Updated: 17 Feb 2026
The FCA have finalised new rules for Buy Now Pay Later (BNPL) providers to improve protections for users and help them better manage their finances. Find out here what to expect.
Key takeaways
From July 2026, BNPL providers must be authorised by the FCA and give clearer pre‑contract information to ensure customers understand what they’re signing up for.
Mandatory affordability checks will apply to every BNPL transaction, with users gaining access to the Financial Ombudsman Service and Section 75 protections for new agreements.
The FCA will ban backdated interest and tighten rules to reduce missed payments and disputes, though BNPL will still lack some protections and pose risks around returns and refunds.
The popularity of By Now, Pay Later (BNPL) has exploded over the past few years across shoppers of all kinds.
However, providers of these services haven't been as strictly regulated as other financial services. As a result, many people have found themselves falling behind on payments or missing important fine print in their contracts.
But the FCA is making some changes. With these new rules coming into effect July 2026, the hope is that greater protection will help prevent customers from falling into debt or making financial decisions without being properly informed.
FCA's new regulations for Buy Now Pay Later
Providers must be authorised by the FCA
The Financial Conduct Authority (FCA) are the UK's independent regulator of financial services providers. From July 2026, any BNPL providers wanting to operate in the UK would have to apply for FCA authorisation.
This means that they will fall within the scope of the FCA's Consumer Duty, which requires financial services providers to deliver good outcomes for their customers.
The FCA will also continuously monitor outcomes for BNPL customers to insure this, including monitoring how providers and their partners promote and use BNPL.
While the FCA won't be applying the full set of Consumer Credit regulations as they do for other credit products and services, there are expectations that will need to be upheld to ensure customers are fully informed and not misled by BNPL contracts.
Providers need to clearly share pre-contract information with customers
Before making a purchase with BNPL, traders will be required to outline clearly the terms of contracts before users complete their applications – not after.
This is intended to help customers better understand what it is they’re agreeing to when they use BNPL schemes and make more informed financial decisions.
There will also be clearer information around payment dates and amounts due, with reminders being sent prior to deadlines to minimise the risk of missed payments and make customers fully aware of their contractual responsibilities.
Providers must carry out mandatory affordability checks
Affordability checks will be applied to every purchase - not just when you open an account.
This means that people will need to undergo basic credit checks to use BNPL services for a transaction, regardless of the purchase value.
BNPL providers will also need to direct customers to free debt advice services if they are struggling with repayments and support customers experiencing financial difficulty.
Customers will have access to the Financial Ombudsman Service
BNPL customers from July 2026 will gain access to the Financial Ombudsman Service, which provides a formal route to escalate complaints if disputes can’t be resolved directly with the firm or with the partnered retailer.
Purchases using BNPL are protected under Section 75
One of the main drawbacks of Buy Now, Pay Later is that it is not covered under section 75 of the Consumer Credit Act, which protects credit card purchases over £100, giving equal responsibility for credit card purchases to credit providers as well as sellers.
As of this summer, this will change, which means if something goes wrong with a purchase over £100 and the seller is deemed in breach of contract, the BNPL company will compensate you for your purchase. However, this will only apply to new agreements made from July 2026 onwards.
Changes will be made to interest and fees
The FCA is also addressing how interest and fees are applied to protect customers from being overcharged at the end of 0% interest promotions.
There have been cases of firms backdating interest when customers fail to pay off their items in full by the end of promotional interest-free periods.
In these instances, if the balance hasn't been paid in full by the end of this period, firms have been known to charge interest on the full amount of the item from the date it was purchased and not just the outstanding balance, even if part of the item had already been paid off.
Under the new proposed rules, this practice will no longer be allowed.
Do these new regulations make BNPL safer to use?
While these new rules go some way to protect customers using By Now, Pay Later, they still fall short of the ideal and may not be the best option compared to other types of credit.
It's important to know that none of the new rules will be in place until July 2026, so Buy Now, Pay Later services are still lacking important protections.
There are still some other issues with BNPL that may not make it the best option, like complicated or delayed returns.
According to Citizens Advice, 16% of people who returned an item with they had purchased with BNPL were still being chased for payments even after the item had been returned.
One in ten then went on to be charged late payment fees when they refused to continue paying for an item they had returned.
The fear of high interest and a lack of clear explanation in the event of a return has also compelled many people to continue paying for an item they had returned.
Out of people who returned items through BNPL, 11% felt pressured into completing their payments even though they'd already returned the item, and then didn't get a refund.
Kara Gammell
Personal Finance & Insurance Expert
Personal Finance & Insurance Expert
Don't forget that Buy Now, Pay Later is borrowing
As with any other kind of credit, Buy Now, Pay Later schemes come with risks - ones that not everyone may realise because in the past they have been so easy to apply for.
It can be difficult to track your spending if you're juggling multiple repayments for different purchases and retailers each month, and missing payments can come with costly fees as well as impact your credit score.
But with these new regulations in place, we hope that customers better understand what it is they're signing up for when they chose one of these deferred payment methods and have the chance to give more thought into whether it's the right option for them.
Author
Alicia Hempsted
Insurance Expert
Alicia is MoneySuperMarket's editorial content manager. She specialises in insurance, with a background in copywriting, digital marketing, and insurance advice. Since joining MoneySuperMarket in...
