Buy now, pay later gains affordability checks and refund rights

The Financial Conduct Authority (FCA) has started regulating buy now, pay later. The rules took effect on 15 July 2026. They cover the well-known providers, including Klarna, Clearpay, and PayPal’s Pay in 3.

Alison Walters, the FCA’s Director of Consumer Finance, said that consumers “will benefit from clearer information before they borrow, proportionate affordability checks, and access to support if they get into difficulty”.

What a provider now has to do

Before you buy, and if you fall behind, a provider now has to:

• Check that you can afford the repayments on every purchase, including ones under £50.
• Tell you how much each payment is, when it is due, and what happens if you miss one.
• If you miss a payment, tell you what you owe and how to put it right.
• If you are struggling to repay, point you to free debt advice and consider giving you longer to repay or waiving a fee.

If something you buy goes wrong

Buy now, pay later is now a regulated form of credit. The FCA calls it deferred payment credit. That means Section 75 of the Consumer Credit Act applies to it.

Section 75 covers a purchase that costs between £100 and £30,000. If it arrives faulty, never arrives, or the shop goes under, you can claim against the provider as well as the shop.

If you complain about a purchase and the provider does not put it right, you can raise a complaint with the Financial Ombudsman Service. The Ombudsman is free and independent, and the provider must do what it decides.

It covers what you buy from 15 July 2026

The rules cover buy now, pay later agreements you make on or after 15 July 2026. They do not cover a purchase you made before that date.

A provider must be authorised by the FCA to offer buy now, pay later. You can check a provider on the FCA register.

It is still a debt

Buy now, pay later splits a cost into instalments. It is borrowing, even when it charges no interest. If you miss a payment, the provider can charge you a fee. If you have several plans running at once, the payments add up.

What you can do now

• Treat it as borrowing. Only buy what you could afford to pay for outright.
• Keep track of every plan you have running and when each payment is due.
• If you fall behind, tell the provider and ask for help. Get free debt advice from MoneyHelper.
• If a purchase over £100 goes wrong, claim against the provider under Section 75. If the provider does not resolve it, raise a complaint with the Financial Ombudsman.