New rules to end Buy-Now, Pay-Later wild-west, protect millions of shoppers

Over 10 million people who use Buy-Now, Pay-Later (BNPL) products will gain stronger rights and clearer protections under new rules – stopping unaffordable borrowing and helping families keep more of their money.

From next year, BNPL firms will need to follow consistent standards — so shoppers will know exactly what they’re signing up to when they opt to break up payments, whether they can afford it, and how to get help when things go wrong.

That means upfront checks to make sure people can repay what they borrow, fairer and faster access to refunds, and the right to complain to the Financial Ombudsman — bringing BNPL in line with other credit products.

BNPL is a useful tool when used responsibly to help people manage their finances and has grown rapidly with an extra 2 million people using the product since 2022.

The changes will boost consumer confidence while giving firms the certainty they need to innovate, grow and invest — delivering on the government’s Plan for Change to grow the economy, unlock investment, create jobs and put more money into people’s pockets.

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.

These new rules will protect shoppers from debt traps and give the sector the certainty it needs to invest, grow, and create jobs through our Plan for Change.

The announcement is backed by brand new reforms to the Consumer Credit Act — which will replace a 50-year-old regime with a modern, pro-growth framework that reflects how people borrow today.

Outdated and confusing rules will be removed, with oversight shifting to the FCA’s more flexible system — cutting unnecessary burdens on business while strengthening protections for consumers.

Further information

• The government is today publishing the response to the consultation on BNPL first announced in October 2024 and has confirmed that the legislation bringing BNPL into regulation will be laid in Parliament on 19 May.

source: GOV