FCA regulation of most BNPL agreements begins

Most buy now pay later agreements taken out from 15 July 2026 are now regulated by the Financial Conduct Authority, according to Business Debtline, which says agreements taken out from that date carry the consumer protections that apply to borrowing from most other creditors¹. UK Finance, the banking and finance industry body, said the BNPL sector was brought under FCA regulation in July 2026, "giving customers stronger protections"².

Business Debtline sets out what the change means for agreements taken out from 15 July 2026: providers must carry out affordability checks, complaints can be escalated to the Financial Ombudsman Service, and buyers get the same section 75 protections as a credit card purchase¹. MoneySavingExpert describes section 75 as requiring credit card and BNPL providers to protect purchases over £100, and states that the protection has been extended to BNPL agreements taken out since 15 July 2026³. It adds that the purchase must be no more than £30,000³.

Agreements taken out before that date are largely outside the regime. Business Debtline says most short-term BNPL agreements taken out before 15 July 2026 will not be FCA regulated, and that BNPL provided by the same company that sold the item may not be regulated, though it describes that type as rare¹. MoneySavingExpert notes that most BNPL agreements do not currently affect the credit score "number" from Equifax, Experian or TransUnion, with Zilch an exception, and that reporting "will start to become commonplace as the BNPL sector becomes regulated from July 2026"⁴.

Late payment charges vary by provider and are not set by the regulator. Business Debtline says Klarna adds a £5 late payment fee for payments more than seven days overdue, currently capped at two late fees per order, while Clearpay adds £6 for each late instalment and a further £6 if the payment is still outstanding seven days later, capped based on how much has been borrowed¹. MoneySavingExpert reports Klarna's late fee as the lower of £5 or 25% of the instalment value, with a maximum of two late fees per instalment, and Clearpay's overall late fees as capped at the lower of £24 or 25% of the order value³. It says PayPal and Zilch do not charge late fees³.

Why it matters for households

The dividing line is the date the agreement was taken out. For agreements from 15 July 2026, affordability checks apply before credit is granted, complaints can go to the Financial Ombudsman Service, and section 75 can in some situations make the creditor legally responsible if there is a problem with the purchase¹. Business Debtline says there are six months from the date of the lender's final response to take a complaint to the Ombudsman¹. For older agreements, those protections generally do not apply¹.

Missed payments can still be recorded. Business Debtline says missed payments can be shared with credit reference agencies, and that falling behind by 90 days or more may lead to the account being reported as defaulted, which stays on a credit report for six years¹. It also notes that where a customer is in financial difficulties, the FCA's Consumer Credit sourcebook (7.6.12) says a firm must not request payment on a continuous payment authority more than twice on the same agreement once it has already been refused, and that money taken after a continuous payment authority is withdrawn is an unauthorised transaction for which the card issuer should refund¹. UK Finance estimates 12.9 million UK adults, or 22%, used BNPL at least once in 2025².

What happens next

The regulation applies to agreements taken out from 15 July 2026, so the share of regulated agreements rises as new ones are taken out and older ones are repaid¹. Credit reference agency reporting of BNPL is expected to become more common as a result of regulation⁴. No further implementation dates are set out in the published material.