The rules for Buy Now Pay Later have changed

In July, Buy Now Pay Later (BNPL) services like Klarna, Clearpay and PayPal Credit were brought under the supervision of the Financial Conduct Authority (FCA) for the first time, aligning them with other forms of borrowing.

It's a change campaigners have called for over many years, and it’s good news for shoppers. But the headline hasn’t changed: BNPL is real debt, and there are still consequences if you fall behind on repayments. Remember that regulation makes it safer, but it doesn’t make it free.

What's new

If you take out a new BNPL agreement from today onwards, the provider must:

• Check you can afford it - lenders now have to carry out proportionate affordability checks before lending, even on smaller purchases.

• Tell you what you’re signing up to - clear, upfront information on when payments are due, how much, and what happens if you miss one.

• Help you if you struggle - lenders must support customers in financial difficulty and, where appropriate, point them towards free debt advice.

• Answer to the Ombudsman - if something goes wrong and you’re unhappy with the provider’s response, you can now take your complaint to the Financial Ombudsman Service.

There’s new purchase protection too. Section 75 of the Consumer Credit Act now applies, so for items costing over £100 and up to £30,000 the provider is jointly liable with the retailer if something goes wrong. This is the same protection you’d have paying by credit card.

Here are four things to think about before you click that BNPL box

Watch out for late fees: Missing a payment can still cost you. Late fees often start at £5 and can climb to 25% of an item’s price.

Know the score: BNPL agreements may be reported to credit reference agencies, and this is becoming more common as the sector is regulated. Repaying on time could help build a positive picture, but falling behind could count against you when you next apply to borrow.

Stay in control: BNPL is quick and simple - but that also makes it easy to overspend. Multiple payment plans from different providers can be tricky to manage.

Check what’s covered: The new protections are a genuine step forward, but they don’t apply to everything. Agreements you took out before July 15, 2026 stay unregulated, and a retailer’s own instalment scheme isn’t covered in the same way. Know which of your plans sit inside the new rules and which don’t.

And three ways to manage your money

Track your outgoings: Using an app or a spreadsheet to monitor spending can be a real eye-opener!

Plan ahead: If a big purchase or special occasion is on the horizon, setting something aside regularly for it, however small, can reduce borrowing costs. Our savings accounts are built for exactly this - small, regular amounts, put by for when you need them.

Hold off and think: It’s easy to get carried away with online shopping and impulse buying. If you have any budgeting concerns, one idea is to wait 24 hours before deciding to buy non-essentials.

Good to know

1. At Westcountry Savings and Loans, we take your BNPL commitments into account - along with other spending - when we assess a loan application. We’ll also check your household budget to make sure you can manage your repayments. Our team will give you a clear date your loan is expected to be paid off, based on you making your repayments on time. There are no arrangement fees and no repayment penalties. See what you may be able to borrow.
2. Campaigners like Martin Lewis, founder of MoneySavingExpert.com, spent years raising concerns about BNPL being unregulated and what that meant for the people using it. The new changes are the result. But his underlying advice still stands: remember that “it is a debt”.

Find out more

• The FCA’s guide for consumers, including how to check whether your provider is authorised: https://www.fca.org.uk/consumers/buy-now-pay-later

• MoneyHelper, the government-backed service offering free, impartial money guidance: https://www.moneyhelper.org.uk/en/everyday-money/credit/what-are-buy-now-pay-later-purchases