The Financial Conduct Authority (FCA) has introduced stronger protections for buy now pay later (BNPL) customers, as the sector comes under Consumer Duty regulation.

The measures have been published after the Government decided to bring the BNPL sector under FCA regulation last year.

BNPL is used by 11 million people in the UK, and the market's value increased from £60m in 2017 to over £13bn in 2024.

The FCA said it provides an important source of credit for many but warned that no protections have been in place for those who use it repeatedly and may not be able to afford it.

The regulator stated that the aim of the new regulation is to help consumers navigate their financial lives, with appropriate support for consumers.

From 15 July, customers will benefit from clear upfront details about their agreement, including when payments will be due, amounts and what happens if they miss a payment.

Lenders, who will need to be authorised by the FCA to provide BNPL, must also carry out proportionate checks to make sure customers can afford to repay what they borrow before offering BNPL. Customers who are in financial difficulty will also be offered support and, where appropriate, directed to free debt advice.

Deputy chief executive at the FCA, Sarah Pritchard, stated: "We want the BNPL sector to thrive – it provides an important source of credit to many – and we will continue to support firms who want to develop innovative new products.

"But crucially, no one should be lent to if they're unable to repay, because that could worsen their financial situation. Now Parliament has given us the powers, we’re putting in place proportionate protections for the 11 million people who use it."

Under the rules outlined by the FCA, firms can register for the temporary permissions regime between 15 May and 1 July 2026. They will then have six months, from the date the regime comes into force, to apply for full authorisation.

Managing director at PSE Consulting, Chris Jones, described the introduction of BNPL regulation is a "landmark moment" for UK consumer finance.

He concluded: "By introducing mandatory affordability checks, clear product disclosures, and stronger consumer support, the FCA is ensuring all BNPL actors meet the same high standards as the rest of the market.

"In the past, consumer organisations and players in the traditional banking market have raised concerns about the lack of a level playing field for consumer lending, with BNPL exploiting loopholes in regulation. This announcement should put these concerns to rest, and allow BNPL to flourish in the mainstream of consumer credit.

"The FCA’s rules will need to evolve to ensure that all players in the consumer credit space from BNPL to traditional credit card providers have these conversations in a responsible manner."

---