New UK buy now, pay later rules take effect with stronger protections and stricter checks

The UK has brought buy now, pay later services under FCA regulation, granting shoppers new rights while requiring affordability checks on each transaction.

• From Wednesday, BNPL lenders must be authorised by the Financial Conduct Authority to operate in the UK.
• Consumers can now claim refunds under section 75 protection on purchases over £100 and refer unresolved complaints to the Financial Ombudsman Service.
• Lenders must conduct affordability checks before each loan and provide clear upfront information on payment terms and missing a payment.
• Kate Pender, chief executive of Fair4All Finance, said 10% to 30% of current BNPL users could be rejected under the new checks, with nearly half of those likely refused having never missed a payment.