The UK is set to introduce significant reforms to the buy now, pay later (BNPL) sector with regulations coming into effect on July 15, 2026. These changes will mandate that BNPL providers conduct thorough affordability checks to ensure that customers can genuinely manage the repayments, addressing previous concerns regarding consumer financial health. Borrowers will be informed in a clear and upfront manner about their payment schedules and the repercussions of missed payments, which aims to enhance transparency in transactions.

Moreover, the reforms include a commitment from BNPL lenders to provide assistance if customers find themselves struggling to meet their financial obligations. This includes guidance on accessing free debt advice and ensuring that customers have a straightforward avenue to express grievances through the Financial Ombudsman if they encounter issues with their BNPL arrangements. Such measures are part of a broader effort by the Financial Conduct Authority (FCA) to tighten regulation within the credit sector, ensuring consumer protection and responsible lending practices.

This regulatory shake-up reflects mounting concerns over the potential risks associated with unregulated BNPL schemes, which have been criticized for leading consumers into unmanageable debt. The introduction of these measures is poised to reshape the BNPL landscape in the UK, providing consumers with greater protection and clarity, while also holding lenders accountable for their practices. The ultimate goal is to foster a safer borrowing environment that serves the needs of consumers without spiraling into debt traps.