Examining the FCA’s Enhanced Safeguards for "Buy Now Pay Later" Customers in England
On 11 February 2026, the Financial Conduct Authority (“FCA”) unveiled a significant package of new protections for borrowers using Buy Now Pay Later (“BNPL”) services. This move reflects mounting concerns about the rapid growth of BNPL credit and its impact on consumer financial health. The FCA’s announcement marks a watershed moment for consumer credit regulation and aims to ensure that BNPL customers are treated fairly, with greater transparency, support, and recourse for financial difficulties.
The Rise of Buy Now Pay Later
BNPL credit has surged in popularity over the past few years, offering consumers flexible payment options for everyday purchases. Major retailers and fintech firms have integrated these services, allowing shoppers to split payments into interest-free instalments. While this has brought convenience and increased purchasing power, it has also raised alarms about the potential for excessive borrowing with relative ease and minimal financial checks, lack of clarity about terms, and inadequate protections compared to traditional credit products.
Key Protections Announced by the FCA
The FCA’s new measures target several critical areas of consumer vulnerability within the BNPL sector.
The aim of the proposed safeguards, which will come into force on 15 July 2026, is to address practices that have previously left borrowers exposed to unclear terms, unexpected charges, and limited support when encountering financial difficulties.
1. Mandatory Creditworthiness Assessments
One of the central pillars of the FCA’s announcement is the requirement for BNPL providers to conduct robust creditworthiness assessments prior to approving transactions. Previously, many BNPL services allowed consumers to access credit with minimal checks, increasing the risk of over-indebtedness. Under the proposed measures, providers must evaluate a borrower’s ability to repay, considering income, existing debt commitments, and overall financial health. This brings BNPL lending closer in line with the standards applied to credit cards and personal loans.
2. Transparent Terms and Conditions
The FCA has mandated that BNPL companies provide clear, easily accessible information about the costs, terms, and potential consequences of missing payments. All key terms, including fees, interest rates (where applicable), repayment schedules, and the impact on credit scores, must be presented in plain English, ensuring that consumers are fully aware of their obligations before committing.
The regulator has also cracked down on confusing or misleading advertising, requiring firms to highlight risks as prominently as benefits.
3. Enhanced Support for Borrowers in Financial Difficulty
Recognising the challenges faced by borrowers who struggle to make repayments, the FCA has introduced new obligations for BNPL providers to identify and support customers in financial hardship. BNPL providers must offer tailored forbearance options such as payment holidays, reduced repayments, or interest waivers, and proactively refer vulnerable borrowers to free debt advice services. The FCA has also stipulated that no additional charges or interest can be levied on customers who seek help for financial difficulties, beyond what was originally agreed.
4. Access to Dispute Resolution
From now on, BNPL customers will have the right to escalate complaints about their provider to the Financial Ombudsman Service (“FOS”), aligning BNPL with other regulated credit products. This ensures that consumers can seek impartial resolution for grievances related to unfair treatment, mis-selling, or poor service, providing an essential backstop in cases where they cannot resolve issues directly with the provider.
Implications for Consumers and the Industry
The FCA’s new protections are expected to bring multiple benefits to consumers, not least by reducing the risk of unmanageable debt and improving the clarity of BNPL offers. Greater scrutiny of borrowers’ financial positions should help prevent individuals from taking on commitments they cannot afford, while transparent terms and access to dispute resolution will empower customers to make informed choices and seek redress when necessary.
For BNPL providers, the new rules will necessitate significant changes to business models, customer journeys, and compliance processes. BNPL providers will need to invest in improved credit-checking technology, retrain customer service teams, and revisit marketing materials to ensure adherence to the FCA’s standards. While these steps may increase operational costs, they are likely to foster greater trust in BNPL products and encourage more responsible lending across the sector.
Looking Ahead
The step towards mandatory affordability assessments and clearer disclosures is seen as overdue, given the rapid expansion of the sector in recent years.
The FCA’s protections for BNPL borrowers mark a significant evolution in UK consumer credit regulation. As the new rules come into force, both consumers and providers will need to adapt to a more rigorous and supportive environment. The changes are designed to ensure that BNPL remains a safe and useful tool for managing spending, without exposing users to undue harm. If implemented effectively, these measures could serve as a model for responsible innovation in financial services both in Britain and beyond.
