Buy Now, Pay Later is changing - and you might not make enough money to use it, writes Dean Dunham
Lenders will finally have to check that you can actually afford the repayments before waving purchases through
For years, Buy Now Pay Later has been the wild west of British spending.
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One in five adults has used it, lending topped £13 billion in 2024, and yet the sector operated with almost none of the safeguards that cover a humble credit card. From today, that changes and it's about time.
From 15 July, the Financial Conduct Authority (FCA) starts regulating Deferred Payment Credit: the interest-free instalment deals offered at millions of online and in-store checkouts. Lenders will finally have to check you can actually afford the repayments before waving the purchase through. They'll have to spell out, up front, when payments fall due and what happens if you miss one.
Crucially, you'll gain two protections that genuinely matter: the right to a refund from the lender under Section 75 if what you bought is faulty or never arrives and the requirements of a Section 75 claim are met, and the right to take a complaint to the Financial Ombudsman if you're fobbed off. Two significant tools in the consumer protection toolbox that I talk about nearly every week on the LBC Consumer Hour.
For a product that quietly turned "treat yourself" into "borrow yourself" for so many young and hard-pressed shoppers, this is a real step forward.
But this improved regime only applies to agreements taken out on or after 15th July 2026. If you're already juggling BNPL debt, you get nothing new. Interestingly, analysts are reporting that up to a third of current users could be turned down once affordability checks bite. That's the uncomfortable part: the people most likely to be locked out are often those most reliant on it and the worry is they'll drift toward costlier, or even illegal, lenders instead.
So, welcome the rules, and always use the FCA's Firm Checker (available on its website) to confirm your provider is authorised. But the reality here is that the regulation plugs one gap while risking another.
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Dean Dunham KC presents LBC's Consumer Hour every Sunday from 9pm-10pm.
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