Millions of online shoppers who use Buy Now Pay Later (BNPL) services currently lack the protections afforded to credit card users. However, new legislation set to take effect on July 15 will change this. BNPL companies such as Klarna and Clearpay will come under the regulation of the Financial Conduct Authority (FCA) for the first time.
Key Consumer Rights Under New Rules
Consumers will receive clear, upfront details about their credit agreements, including payment due dates, amounts, and consequences of missed payments. Affordability checks will be introduced to prevent overcommitment, and extra help will be available for those facing financial difficulties. Shoppers will also be able to file complaints with the FCA if issues arise.
Ruth Lawe spoke to Jonathan Chesterman, debt advice policy manager at StepChange, to explain what these changes mean in practice.
What New Rights Will Consumers Have?
"If something goes wrong, shoppers have the right to complain to the BNPL provider. If they don't receive a satisfactory response, they can approach the Financial Ombudsman Service, which is free and objective," Chesterman said. Previously, the only recourse was filing a court case under contract law. Shoppers will also receive more information about their commitments and what happens if they miss payments.
What Will Affordability Checks Entail?
The specifics of affordability checks are still unclear. "At a minimum, there should be warnings, and possibly a quick calculator at checkout, to help customers work out whether they can afford the repayments," Chesterman said. "The regulation addresses two big problems: no credit checks currently exist, so people in financial difficulty can keep taking on more debt. At StepChange, we've seen clients with over 30 BNPL agreements—they clicked the option every time they bought something without tracking what they owed. Affordability checks should prevent that."
Impact on Existing BNPL Balances
Balances incurred before July 15 will remain under the old unregulated system, offering zero consumer safeguards. StepChange advises consumers to review outstanding balances immediately to know exactly how much is owed and when payments are due.
Consequences of Missed Payments Under New Rules
Missing a BNPL payment may still have consequences. "That depends on individual BNPL firms' collection practices," Chesterman said. For severe delays, lenders may add negative markers to credit files, lowering credit scores and potentially affecting mortgage or vehicle finance applications.
Are There Any Downsides to the New Regulations?
"I would say no, but it's hard to know until it goes live in July," Chesterman said. "Some critics argue the regulation could go further, or that it might drive shoppers to other financing sources. But at StepChange, we welcome greater regulation because it will reduce the number of shoppers tipped into debt by multiple BNPL agreements."
Advice for BNPL Users
Chesterman advised: "Before purchasing, ensure you can afford repayments. Keep track of BNPL purchases—use a spreadsheet or pen and paper to see how many months you have left and the amount due. If you overcommit, seek help immediately; don't suffer in silence." Experts urge anyone in debt to seek independent financial guidance promptly. "There is no need to pay for debt advice," he added.
