It didn't feel like debt. It felt like convenience.
A sector long defined by frictionless borrowing has met its first serious reckoning: as of this week, Buy Now Pay Later lenders in the UK must answer to the Financial Conduct Authority, bringing consumer protections that credit card holders have long taken for granted. The change arrives not in a vacuum but against a backdrop of 100 million transactions and stories like Tim Riesner's — a £24,000 debt that never felt like debt until it was. Regulation, as ever, is both shield and gate: it guards those inside the system while raising the question of where those turned away will go.
- A sector worth over £7 billion and touching 8.5 million UK customers has operated without mandatory affordability checks — until now.
- Between 10 and 30 percent of current BNPL users may fail the new checks, and nearly half of those likely to be rejected have never missed a payment in their lives.
- Debt advisers warn that rejected borrowers don't simply stop needing credit — they migrate toward loan sharks and unregulated lenders who ask even fewer questions.
- Major providers like Klarna have largely welcomed the rules, framing FCA authorization as formalizing practices already in place, while debt charities urge consumers to pause before every purchase.
- The Financial Ombudsman Service anticipates around 2,000 BNPL complaints by March — a number expected to climb as consumers discover rights they never knew they had.
Starting this week, Buy Now Pay Later lenders in the UK must obtain authorization from the Financial Conduct Authority — a watershed shift for a sector critics have long called a regulatory vacuum. Companies like Klarna and Clearpay built enormous businesses by letting shoppers split purchases into interest-free installments with almost no friction. Now that friction is mandatory.
The new rules bring BNPL in line with protections long available to credit card and loan borrowers: access to the Financial Ombudsman Service, refund rights on faulty goods over £100, clear disclosure of missed-payment consequences, and — most significantly — an affordability check before every transaction.
But the check cuts both ways. Kate Pender of Fair4All Finance estimates 10 to 30 percent of current users will be turned away, and her research found that nearly half of those likely to fail have never actually missed a payment. "The need for credit doesn't just disappear," she warned, noting that loan sharks would be "thrilled" to absorb the overflow.
The human cost of the old system is visible in stories like Tim Riesner's. The construction worker accumulated £24,000 in debt across BNPL plans, credit cards, and personal loans — each agreement feeling like convenience rather than borrowing. When health problems forced him out of work, the weight became crushing. With help from Business Debtline and a Debt Relief Order, he is now rebuilding. His experience mirrors what advisers see constantly: BNPL used not for occasional luxuries but for food, energy, and everyday essentials.
The scale is striking — 8.5 million customers, over 100 million transactions, more than £7 billion in 2025 alone, with 98.5 percent repaid on time. Yet younger borrowers are increasingly using multiple small agreements as a substitute for income rather than a supplement to it. Leading providers have broadly welcomed regulation, with Klarna calling it a formalization of existing practice. Debt charities, while supportive, remind consumers that some retailer-run BNPL products fall entirely outside the new framework — and that the simplest test before any purchase remains: would you still buy it if credit weren't on offer?
Starting Wednesday, Buy Now Pay Later lenders in the UK must obtain authorization from the Financial Conduct Authority to keep operating. The shift marks a watershed moment for a sector that has grown explosively over the past few years—one that critics have long described as a regulatory vacuum where anything goes. Klarna, Clearpay, and dozens of smaller competitors have built enormous businesses by letting shoppers split purchases into interest-free chunks with a few clicks, no questions asked. Now the questions are mandatory, and not everyone will like the answers.
The new rules grant consumers protections that have long existed for credit card holders and traditional loan borrowers. If something goes wrong, shoppers can now escalate complaints to the Financial Ombudsman Service for independent review. They can claim refunds and compensation for faulty goods over £100 directly from the BNPL provider. They will receive clear information upfront about what happens if they miss a payment. And crucially, they must pass an affordability check before each transaction goes through—a test designed to ensure they can actually repay what they're borrowing.
But here lies the tension. Kate Pender, chief executive of Fair4All Finance, a not-for-profit focused on accessible financial services, estimates that between 10 and 30 percent of current BNPL users will fail these affordability checks. Her organization's research found that nearly half of those likely to be rejected have never missed a BNPL payment in their lives. "The need for credit doesn't just disappear when you can't access it," Pender told the BBC. "People are often pushed towards more expensive or unregulated alternatives." She warned that loan sharks would be "thrilled" at the prospect of capturing customers turned away by the new rules.
The concern is not abstract. Tim Riesner, a construction worker, found himself caught in exactly this trap. He took out multiple BNPL agreements alongside credit cards and personal loans, each one feeling like a small convenience rather than debt. "It didn't feel like debt. It felt like convenience," he said. "You're buying something online and it says 'split it, pay later'. You think you're being sensible. But you can have multiple plans running at once." Before long, he owed £24,000. His finances collapsed entirely when he had to leave his well-paid job after developing eyesight problems. With help from the charity Business Debtline, he eventually secured a Debt Relief Order and is now working toward becoming debt-free. His story illustrates what debt advisers see constantly: people using BNPL not for occasional splurges but for everyday essentials—food, energy bills, household basics.
The scale of the BNPL market underscores why regulation matters. Credit reference agency Experian estimates that in 2025 alone, 8.5 million customers made more than 100 million BNPL transactions worth over £7 billion. The good news: 98.5 percent of those balances were repaid on time. The concerning news: the sector has attracted younger borrowers especially, with 18 to 24-year-olds showing particularly high adoption rates, though the user base spans all age groups. Money Wellness, an advice service, has noticed a troubling shift—people are no longer using BNPL for occasional high-value purchases but are instead spreading smaller everyday purchases across multiple agreements, effectively using the product as a substitute for income.
Leading BNPL providers have largely embraced the new rules, though with caveats. Klarna's spokesman noted that the FCA's requirements "largely formalise what we already do"—affordability checks, upfront cost disclosure, credit reference agency reporting. The company framed regulation as a positive, saying it "gives consumers added confidence and strengthens their access to protections." Debt charities have welcomed the changes after years of campaigning, though they continue to urge consumers to pause before any BNPL purchase and ask themselves whether they would buy the item if credit were not available. They also point out that some retailers' in-house BNPL products will fall outside the new regulatory framework entirely.
The Financial Ombudsman Service expects to handle about 2,000 BNPL complaints by the end of March. That number will likely grow as consumers discover their new rights and as the affordability checks begin turning people away. The real test will come in the months ahead: whether the regulation succeeds in preventing people from taking on unaffordable debt in a few clicks, or whether it simply redirects vulnerable borrowers toward shadier alternatives that offer even fewer protections.
Citações Notáveis
The need for credit doesn't just disappear when you can't access it and people are often pushed towards more expensive or unregulated alternatives.— Kate Pender, chief executive of Fair4All Finance
We are urging consumers to treat Buy Now Pay Later in exactly the same way as any other form of borrowing.— Jack Sporcic, debt adviser at National Debtline
A Conversa do Hearth Outra perspectiva sobre a história
Why did it take so long for regulators to step in? BNPL has been around for years.
The sector grew so fast that regulation couldn't keep pace. Companies like Klarna were operating in a genuine gap—they weren't technically offering credit in the traditional sense, so existing rules didn't clearly apply. By the time regulators caught up, the market was already enormous.
So the affordability checks are supposed to protect people, but they might actually harm the people who need credit most?
Exactly. The checks are conservative by design—each lender sets their own threshold. Someone with a spotty payment history or tight budget will fail, even if they've never defaulted on BNPL before. The irony is that those people still need to buy things. They don't disappear.
Where do they go instead?
That's the fear. Unregulated lenders, loan sharks, or they just go without. Neither option is good. At least with BNPL, even before regulation, most people were repaying on time. The real problem seems to be people stacking multiple agreements without realizing how much they owe.
Is that a BNPL problem or a consumer problem?
Both. BNPL's design makes it feel frictionless—you're not sitting down with a loan officer, you're just clicking a button at checkout. That psychological distance matters. But consumers also need to be more deliberate about what they're borrowing for and why.
Will the regulation actually work?
It depends what you mean by work. It will definitely reduce some people's access to credit. Whether that's a net good depends on whether those people would have gotten into serious trouble anyway, or whether they genuinely needed that access. We won't know for a while.