Image of hands holding a mobile phone with 'Buy Now Pay Later' written on it.
BNPL can help people to manage their cash flow. It can allow them to spread the cost of purchases and smooth their finances.
But, as with any borrowing, BNPL also carries risks.
Let me be clear about this: BNPL has an important role to play. We don’t want to reduce or remove access to credit, but to ensure it is offered in a way that works for consumers.
That's why we are introducing protections for consumers using BNPL[1]. Consumers will benefit from clearer information before they borrow, proportionate affordability checks, and access to support if they get into difficulty with their repayments.
They will also be able to complain to the Financial Ombudsman Service if something goes wrong, and in some cases the right to a refund from their lender under Section 75 of the Consumer Credit Act.
At its heart, this is about people getting the protections they would reasonably expect when taking on any kind of credit.
A proportionate, flexible approach
We have taken a deliberate and proportionate approach to designing the rules. Rather than creating an entirely new regime, we are building largely on existing consumer credit rules, including the Consumer Duty[2].
Firms will be able to tailor their approach to affordability assessments depending on the product and the customer’s circumstances. This flexibility is important in a market where people use BNPL for a range of reasons.
Access and affordability
We know that some customers who have regularly used BNPL may find it harder to access it once they have to go through an affordability check.
We understand why that might make people concerned, particularly at a time when many households are managing higher costs. But it is important to be clear about what we’re seeking to achieve.
Too often, we have seen people using BNPL repeatedly without a clear view of what they owe, leading to missed payments, late fees and, in some cases, worsening financial circumstances.
Putting sensible checks in place will help prevent consumers from building up unsustainable levels of debt and experiencing harm in the longer term.
Put simply, this is about making sure credit works for people – not against them.
Support for those who need it
Regulation is not just about preventing harm. It is also about ensuring that people are supported in the right way.
If someone is struggling to repay BNPL, they should contact their lender as early as possible. Firms will be required to provide support that is appropriate to the customer’s circumstances, including for those in vulnerable situations. This could include accepting lower repayments or giving a customer more time to repay.
More broadly, anyone worried about their finances should know they are not alone. Free, independent advice is available through organisations such as MoneyHelper[3], as well as a range of debt advice charities. We expect firms to signpost customers to this support where appropriate.
Looking ahead
We will be monitoring how the market evolves once regulation comes into force[4], including how access to BNPL changes over time. Our regulatory reporting and Financial Lives survey[5] will play an important role in helping us understand the impact on consumers.
Our objective is a market where people can continue to benefit from BNPL that is affordable and appropriate, and can access the right protections if they get into difficulty or things go wrong.
Bringing BNPL into regulation is a necessary step. It supports innovation and access to credit, while ensuring consumers are treated fairly, and gives them the right protections.