I've used Klarna exactly twice in my life, both times for a new iPhone from Giffgaff and I remember thinking the same thing: that felt too easy. No credit check, no paperwork, just three taps and the item was mine, paid off in instalments I barely noticed. Turns out I wasn't the only one who noticed how strange that was — the regulator did too, and from 15th July, just four days from when I'm writing this, everything changes.

Buy Now Pay Later (BNPL) is finally coming under proper FCA regulation for the first time since it exploded onto the scene. And while most of this week's coverage will be "great news, BNPL gets safer," there's a sharper story underneath it: the same rules designed to protect people could shut a fair few of them out entirely.

What's actually changing

Until now, BNPL has sat in a strange legal gap. Most agreements are interest-free and repaid within 12 months or fewer, they missed the usual Consumer Credit Act protections. No mandatory affordability checks. No standardised information. No right to complain to the Financial Ombudsman if it went wrong. From 15th July, that ends. BNPL providers — or "deferred payment credit" firms, to use the official term — now need to be authorised by the FCA, and must give customers:

  • Clear information upfront: what you owe, when it's due, and what happens if you miss a payment

  • Proportionate affordability checks before you're allowed to borrow

  • Support if you're struggling, including being pointed toward free debt advice

  • The right to complain to the Financial Ombudsman Service if something goes wrong

The FCA's Sarah Pritchard put it plainly: the goal is

"proportionate protections for the 11 million people who use it," while still letting the sector "continue to thrive."

Worth remembering how fast this thing has grown — BNPL lending went from £60 million in 2017 to over £13 billion in 2024. That's not a niche payment method anymore. More than half of UK adults (54%) have now used it, up from 42% just last year.

One practical point: this only applies to agreements taken out from 15th July. Anything you've already got running stays unregulated under the old rules — so if you're mid-way through a Klarna plan right now, don't assume the new protections cover you.

The bit that nobody is shouting about

Here's where it gets interesting. Alastair Douglas, chief executive of TotallyMoney, reckons up to a third of current BNPL users could lose access once the new affordability checks bite. That's a big number for a "consumer protection" rule to carry. Why? Because BNPL's whole appeal, for a lot of people, was that it didn't ask the awkward questions a credit card or personal loan would. It became a lifeline for people already turned away by mainstream lenders.

Douglas's worry is that tightening the front door doesn't make the need for short-term credit disappear — it just sends people looking somewhere else.

"The problem the government and regulator face next is what fills the BNPL gap," he said, warning it could push vulnerable borrowers "into the arms of unregulated and illegal lenders."

That's an uncomfortable trade-off: protect people from over-borrowing on a regulated, complaint-able product, and risk pushing some of them toward products with no protections at all.

There's a smarter point buried in here too, from Greg Davies at Oxford Risk. He argues that affordability checks based on credit history alone are "necessary but reactive" — a patchy credit file doesn't tell the whole story. What actually signals trouble, he says, is behaviour: using BNPL repeatedly, "stacking" it across several providers at once, or letting short-term commitments quietly pile up. That's the kind of thing a credit check won't catch but a bank statement would.

What this means for you

If you use BNPL regularly, this is worth a few minutes of your time. Check a new provider is properly authorised using the FCA's Firm Checker before committing to anything from 15th July onwards. Be honest with yourself about whether you're juggling more than one BNPL agreement at once — that's exactly the pattern Davies flagged as risky, even when each individual payment feels manageable. And if you're already stretched, MoneyHelper's Debt Advice Locator is free and confidential — no shame in using it.

It's also a reminder that BNPL is borrowing, even when it doesn't feel like it. Our household budget planner is a decent place to see BNPL commitments sitting alongside everything else, rather than off in their own little blind spot.

Final Thoughts

- From 15th July 2026, BNPL lenders must be FCA-authorised, run affordability checks, give clear terms, and let you complain to the Financial Ombudsman

- These protections only apply to agreements taken out from 15th July — existing plans aren't covered

- Up to a third of current BNPL users could be excluded once affordability checks apply, according to TotallyMoney's Alastair Douglas

- The concern: excluded borrowers might turn to unregulated or illegal lenders instead

- Repeated use or "stacking" BNPL across multiple providers is a bigger warning sign than your credit file alone

- BNPL is still debt — worth tracking it properly rather than treating it as separate from the rest of your spending

This article is here to give you some information and is for educational purposes only. It is not meant to give you financial advice. It is always a good idea to chat with a financial adviser who knows you well and can help you make the best decisions for your situation.

Sources

1. https://www.fca.org.uk/news/press-releases/new-protections-confirmed-buy-now-pay-later-borrowers

2. https://www.fca.org.uk/consumers/buy-now-pay-later

3. https://www.fca.org.uk/publications/policy-statements/ps26-1-regulation-deferred-payment-credit

4. https://finance.yahoo.com/economy/policy/articles/buy-now-pay-later-rules-133514689.html

5. https://www.finder.com/uk/buy-now-pay-later/buy-now-pay-later-statistics