The UK government has confirmed new buy now, pay later (BNPL) lenders regulations, mandating affordability checks and clearer consumer protections. The move addresses growing concerns around unregulated short-term credit usage, which has surged to 11 million users nationwide.
The updated legislation, set to take effect in 2025, requires BNPL firms to perform upfront affordability assessments, speed up refund processing, and give customers access to complaint resolution through the Financial Ombudsman Service.
The Financial Conduct Authority (FCA) reports a marked increase in BNPL use, particularly among women aged 25–34 and lone parents. Around 40% of the latter demographic now rely on the service. Despite its convenience, industry watchdogs and consumer groups have raised alarms about the ease shoppers can incur unsustainable debt through these platforms.
BNPL providers operating in the UK will be subject to consistent standards aligned with other credit products. This could affect customer onboarding flows, lending algorithms, and risk management protocols.
The rules also allow firms to differentiate on transparency and consumer trust, as regulatory certainty may bolster investor confidence and long-term scalability in the sector.
The announcement comes amid a broader government effort to rein in emerging forms of consumer credit and provide stronger regulatory oversight for fast-growing fintech solutions.
