‘Buy Now, Pay Later’ rules to change across UK from July 15 | UK | News

People who use Buy Now Pay Later (BNPL) will face stricter rules later this month. The system is changing across the UK from Wednesday, July 15, and offers people a greater chance of avoiding more crippling debt.

Millions of shoppers who use BNPL lenders to defer payments on purchases are set to benefit from greater protections under new rules. From later in July, popular online lenders such as Klarna and Clearpay will fall under the Financial Conduct Authority’s (FCA) regulation.

Affordability checks, support from BNPL providers for those in financial difficulty, and the ability to escalate complaints to the Financial Ombudsman Service if “something goes wrong” are some of the changes to consumer rights.

What new rights will consumers have that they didn’t have before?

Jonathan Chesterman, debt advice policy manager at StepChange, said: “If something goes wrong, shoppers have the right to complain to the BNPL provider. If shoppers don’t receive a satisfactory response, they can then approach the Financial Ombudsman Service, which is free and objective.

“Previously, if shoppers had a complaint they couldn’t resolve amicably or mutually with their BNPL provider, filing a court case under contract law would’ve been the only option. Shoppers will also receive more information about what they’re signing up to, what their commitments are and what the lender will or won’t do if they miss payments.”

What will the affordability checks entail?

While the exact checks remain unclear, Jonathan said there “should be warnings” at a minimum or something like a calculator at the checkout to clearly lay out what those repayments would look like before committing to the purchase. He added: “The key thing is lenders will have to do something, whether that’s asking the customer or a more detailed assessment of income and outgoings.

Jonathan claims that the new checks address “two big problems”. He said: “Firstly, there are currently no credit checks, so people already in financial difficulty can keep taking on more debt.

“Secondly, at StepChange we’ve seen clients with over 30 BNPL agreements – they clicked the option every time they bought something, and they didn’t keep track of what they owed. Affordability checks should mean lenders can no longer passively let that happen.”

What happens if you use BNPL before the new rules?

Any BNPL agreements taken out before July 15 will not be covered by the new rules. For shoppers juggling multiple BNPL agreements, it’s worth reviewing them now and ensuring you have a clear picture of what you owe and when payments are due.