Buy now, pay later shoppers get affordability checks and refund rights under new FCA rules

The Financial Conduct Authority (FCA) has started regulating buy now, pay later. The rules took effect on 15 July 2026 and cover the best-known buy now, pay later brands people already use, such as Klarna, Clearpay and PayPal Pay in 3.

Alison Walters, the FCA’s Director of Consumer Finance, said that shoppers would gain from the change.

Consumers will benefit from clearer information before they borrow, proportionate affordability checks, and access to support if they get into difficulty with their repayments.

What a provider now has to do

Before someone borrows, and if they fall behind, a provider now has to:

• check the shopper can afford the repayments on every agreement, however small
• set out how much each payment is, when it is due and what happens if a payment is missed
• tell the shopper what they owe and how to put it right after a missed payment
• point anyone who is struggling towards free debt advice, and consider allowing longer to repay or waiving a fee

Claiming money back when something goes wrong

Buy now, pay later is now a regulated form of credit. The FCA calls it ‘deferred payment credit’, an interest-free form of credit repayable in 12 or fewer instalments over 12 months or less.

Section 75 of the Consumer Credit Act applies to it. This means a shopper who spends over £100, and up to £30,000, can claim against the provider as well as the shop. That covers an item that arrives faulty, never arrives or comes from a shop that goes under.

Anyone unhappy with how a provider handles a claim can complain to the Financial Ombudsman Service. The service is free and independent. Once a consumer accepts its final decision, the provider must do what it decides.

What the rules cover

The rules cover buy now, pay later agreements made on or after 15 July 2026. They do not cover anything bought before that date.

To offer buy now, pay later, a provider must be authorised by the FCA or be part of its temporary permissions regime. Shoppers can check a provider on the FCA register.

It is still a debt

Buy now, pay later splits a cost into instalments. It is still borrowing, even when it charges no interest.

If a payment is missed, the provider can charge a fee. Someone running several plans at once can find the payments add up.

What shoppers can do now

There are some practical steps shoppers can take:

• treat it as borrowing and buy only what they could afford outright
• keep track of every plan and each due date
• tell the provider and ask for help if they fall behind, and get free debt advice from MoneyHelper
• claim against the provider under Section 75 if something over £100 goes wrong, then complain to the Financial Ombudsman Service if it stays unresolved