Financial Conduct Authority introduces new Buy Now Pay Later regulations

Since July, every Buy Now Pay Later (BNPL) transaction in the UK has been subject to a new affordability test, meaning shoppers who used services like Klarna or Clearpay after the summer may find their purchases blocked if they cannot prove they can repay. The Financial Conduct Authority now requires lenders to have regulator approval and to run background checks on each purchase, turning what was once a casual credit option into a formally regulated loan.

The change comes after a surge in BNPL debt during the pandemic and a growing number of complaints about missed payments. Regulators say the sector was operating without clear consumer safeguards, and the festive season is expected to push spending even higher. By treating each instalment plan as a loan, the FCA hopes to stop people from falling into unaffordable debt and to give them better access to refunds and independent complaint handling.

Debt adviser Sara Williams, who now posts tips as “Debt Camel,” warns that the new checks could catch many shoppers off guard. She suggests slowing down purchases and asking whether an item is essential before using BNPL. Reducing the number of clothing items bought in different sizes can keep credit limits lower. Cancelling unused subscriptions helps avoid the temptation to fund them with BNPL. If an account is closed or a limit slashed, Williams recommends contacting debt charities for food‑bank vouchers and using the MoneyHelper website to find free advice, list debts, and prioritize bills. She also cautions against quick‑fix debt schemes seen on social media.

Consumers who act now can avoid being blocked when the holidays arrive. Keeping a written record of what is owed, checking eligibility for benefits, and using budgeting tools can keep repayments on track. As regulators tighten enforcement, failing to meet the new checks could damage credit scores and limit access to other forms of credit. The message is clear: treat BNPL like any other loan, plan purchases carefully, and seek help early if repayments become difficult.