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Consumers to get more protection from ‘wild west’ of buy now, pay later products

19 May 2025 2 minute read
A woman using a laptop as she holds a bank card. Photo Tim Goode/PA Wire

Shoppers will receive more protection from the “wild west” of buy now, pay later (BNPL) products from next year under new legislation set to be introduced on Monday.

The legislation will impose new standards on BNPL firms amid concerns a lack of regulation has led some of the 10 million people who use it to take on too much debt.

Emma Reynolds, economic secretary to the Treasury, said: “Buy now, pay later has transformed shopping for millions, but for too long has operated as a wild west – leaving consumers exposed.”

Upfront checks

The new rules will require upfront checks on borrowers to make sure they can afford repayments, fairer and faster access to refunds and a right to complain to the Financial Ombudsman, in line with the rules governing other forms of credit.

It follows a consultation run by the Treasury last year on putting BNPL companies under the supervision of the Financial Conduct Authority (FCA) and applying the Consumer Credit Act to the sector.

Ms Reynolds said the rules would “protect shoppers from debt traps” while giving the sector “the certainty it needs to invest, grow and create jobs”.

Citizens Advice welcomed the legislation, saying it was “a crucial step towards better protections for consumers”.

‘Unaffordable debt’

Tom MacInnes, director of policy at Citizens Advice, said: “For too long, people have been exposed to unaffordable debt from a BNPL sector that has operated in a regulatory area.

“For some time, 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.”

He added that this was “not the end of the road”, and urged the FCA to “act swiftly to set out the strong consumer safeguards that are so urgently required”.

The changes have also been welcomed by BNPL companies, with one – Clearpay – suggesting it would lead to more people using the product.

A spokesperson for the company said legislation would “create a more sustainable foundation for the future of BNPL as it continues to grow as an everyday payment option for consumers”.


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