Government to crack down on buy now pay later

The government is to tighten the rules around buy now pay later (BNPL) services to give shoppers more protection.  

Officials say they want to end the ‘wild west’ of borrowing from unregulated lenders.

What is BNPL?

BNPL lets you delay paying for something you buy. Instead of paying the full amount upfront, you can split the cost into smaller payments over a few weeks or months.

This can be helpful if you’re waiting to get paid or want to spread out the cost of a purchase.

BNPL has become very popular. A recent survey by the Financial Conduct Authority (FCA) found that usage has jumped by two million people over the past three years.

It’s especially common among single parents and young women, with 40% of single parents and 35% of women aged 25–34 using BNPL services.

What’s the problem?

There are concerns that people are spending more than they can afford using BNPL. Some shoppers may not realise they’re taking on debt or may struggle to keep up with payments.

What’s changing?

Right now, BNPL is not regulated like other forms of credit. Under the new rules, lenders will need to:

• check if customers can afford the repayments before lending
• clearly explain the terms of the deal
• make it easier and faster for shoppers to get refunds
• allow complaints to be handled by the Financial Ombudsman

These changes are meant to give people more protection and make sure they understand what they’re signing up for.

When will the new rules start?

The changes are expected to come into effect in 2026.

How have people reacted?

Emma Reynolds, the economic secretary to the Treasury, said BNPL had ‘transformed shopping for millions’, but had left consumers exposed and operated as a ‘wild west’.

"These new rules will protect shoppers from debt traps and give the sector the certainty it needs to invest, grow, and create jobs," she added.

"For some, this has had dire consequences. Many people are struggling to repay credit they can't afford, falling behind on essential bills and often needing emergency support, like food bank vouchers."

Here at Money Wellness, we’ve seen a 68% increase in the number of people seeking help with BNPL debt in the past year, along with a 40% rise in BNPL debt balances. 

We've been calling for stronger rules around BNPL so that customers fully understand what they're signing up for and the risks involved. So we welcome the government’s move to regulate the sector.

Our director of external relations, Sebrina McCullough said: 

"We’ve seen a significant rise in people struggling with BNPL debt, often because they’ve used it to plug gaps in everyday budgets. For many, it’s become a way to spread the cost of essentials like food shopping, rather than to cover large expenses.

“While BNPL can be helpful when used carefully, the lack of checks and the ease of stacking multiple agreements has left some people facing hundreds - even thousands- in repayments they can’t afford.“The government’s move to introduce regulation is a welcome step that should help prevent more people from getting into difficulty.”

Find out more about this type of borrowing in our BNPL guide, including what to do if you can’t make a payment.