Buy now, pay later user? You'll get new protections this week – including access to the Ombudsman if something goes wrong
If you use buy now, pay later (BNPL) to spread the cost of a purchase from Wednesday 15 July onwards, you'll benefit from new protections – including being able to escalate complaints to the free, independent Financial Ombudsman if something goes wrong.
Under the new rules, which have been in the works since 2021, BNPL services – such as Clearpay, Klarna and PayPal's 'Pay in 3' – will have to be regulated by the Financial Conduct Authority (FCA), bringing them in line with other forms of debt such as credit cards and personal loans.
These rules will apply to new BNPL purchases from Wednesday 15 July – they don't cover any existing agreements you had in place with these providers before that date.
Martin Lewis: 'Done right, BNPL can be useful – but it's also been unsafe for some'
Buy now, pay later done right, isn't wrong. It's fine for those who understand what they're doing and make an active, one-off decision to use it to spread the cost over a few months interest-free.
Yet too many don't do that. They fall for BNPL's ubiquity, use it constantly and build up a bank of unaffordable debt. Worse, not everyone knows it's a debt. That is why it has been unsafe for some, and why I was one of those who campaigned strongly for the government to bring in this regulation, and why I'm delighted to see it happening now.
Most people won't notice any difference. These changes are primarily to ensure BNPL is sold responsibly and that there are protections for when things go wrong, which can be hugely damaging. These protections importantly include being able to appeal to the independent, free Financial Ombudsman Service over problems such as if your credit file is wrongly marked, or if BNPL has been mis-sold rather than properly explained as a debt.
What the new rules mean for you
BNPL firms will need to:
-
Give you clear information about the agreement upfront. This includes how much your payments will be, when they'll be due, and what happens if you miss a payment.
-
Carry out "proportionate" affordability checks for all purchases. Providers will need to run checks for every purchase, not just when you first open an account. These will apply even to purchases of £50 or less. However, firms will have some flexibility in how they make their assessments – so the exact processes may vary by lender.
-
Tell you straight away if you miss a repayment. Firms will need to explain what you owe, the consequence of missing repayments, and how you can remedy the situation. If you're struggling or in financial difficulty, they'll also need to signpost you to free debt help services and consider offering forbearance (for example, giving you longer to repay or waiving fees).
In addition:
-
You'll get powerful Section 75 purchase protection. This applies to items that cost over £100 but not more than £30,000, as it does for credit cards currently. It means the BNPL provider will be jointly liable with the retailer if something goes wrong. As noted above, this will only apply to new BNPL purchases you make from 15 July 2026 onwards – so any purchases made before this date won't be covered.
-
You'll be able to access the Financial Ombudsman Service for any complaints that arise. If you complain to a BNPL firm and don't get anywhere, you'll be able to escalate your complaint to the free and independent Ombudsman, which can officially determine whether you've been treated fairly. This should make it easier to get a refund if you're entitled to one. As with Section 75, you can only take complaints to the Ombudsman about BNPL purchases made on or after 15 July 2026.
See more from MSE
Share this guide?
Latest weekly email
Clever ways to calculate your finances
