FCA plans to apply affordability rules to all buy now, pay later loans

For years, buy now, pay later (BNPL) options have been marketed as a smart, interest-free way to stretch your spending—especially online. Platforms like Klarna and Clearpay promised a smoother checkout, not a credit card pitch. But the UK’s Financial Conduct Authority (FCA) now says the rules have to catch up.

The regulator’s new proposal would apply full affordability checks even to BNPL loans under £50, affecting millions of small transactions that were previously overlooked. The change isn’t just regulatory—it’s a sign that what used to be a casual budgeting tool now carries serious debt implications.

If you’ve used BNPL for everything from ASOS to groceries, it’s time to re-evaluate. Here’s what the new rules could mean, why they’re arriving now, and how they should inform your approach to short-term borrowing and debt control.

Back in 2017, BNPL lending volumes in the UK were about £60 million. By 2024, that number had ballooned to over £13 billion. This isn’t just a fintech growth story—it’s a systemic shift in how younger adults manage (or mask) spending gaps.

According to the FCA, 10.9 million UK adults used BNPL in the 12 months to May 2024. Of those, 5.3 million had over £50 in outstanding balances. Around 1.1 million were juggling over £500. These aren’t isolated cases—they represent a shift in household borrowing behavior.

Part of what makes BNPL attractive is its pitch: no interest, no fees if you pay on time, no lengthy applications. But that frictionless UX has a trade-off. It bypasses the moment of reflection. And for borrowers in more financially vulnerable groups—particularly those aged 25–34 and in deprived areas—BNPL can quietly lead to stacked commitments and hidden stress.

Until now, BNPL wasn’t regulated as formal credit. That meant no mandatory affordability checks, no ombudsman protection, and limited support for those who fell behind. The new FCA proposals aim to close that gap.

The proposed rules are part of a broader effort to bring BNPL lending under the same umbrella as other consumer credit. The FCA's plans include:

• Mandatory affordability checks, even for BNPL loans under £50
• FCA authorization for all BNPL providers
• A legal requirement to offer support to struggling borrowers
• Access to the Financial Ombudsman Service if things go wrong

The smallest transactions are under particular scrutiny. More than 50% of BNPL agreements involve loans below £50. That makes them easy to ignore—and easy to stack.

Without checks, a user could take on multiple small loans across platforms without any one provider seeing the full picture. The result? A debt pile that feels manageable in pieces, but isn’t sustainable in total. The FCA is also inviting comments until 26 September 2025, with implementation expected after a six-month window starting July 2026.

At first glance, checking creditworthiness for a £30 pair of trainers may seem excessive. But financial risk rarely shows up in isolation. It compounds. BNPL platforms don’t always share data with each other. That means someone with 10 active BNPL loans under £50 each may not trigger any internal red flags. But collectively, that person could be carrying £500 or more in unsecured short-term debt—without realizing how it affects their financial capacity.

Affordability checks aren’t there to block access. They exist to prevent blind spots. A simple check might reveal that a borrower already has five other active loans, or that their disposable income doesn’t support another £15 installment plan this week. Think of it less as a judgment—and more like a brake pedal. It gives borrowers a pause, not a penalty.

The proposed regulation isn’t here to ban BNPL. But it’s a reminder that these platforms are credit products—not just payment flexibility tools.

Ask yourself:

• Do you know your total BNPL balance across platforms?
• Are your repayments predictable—or scattered?
• Is BNPL helping your budget—or disguising overspending?
• If Klarna, Laybuy, and Clearpay all called in repayments this week, could you cope?

Many users don’t think of BNPL as “real debt” because it feels casual. It’s not tied to a physical credit card. The terms are short. And as long as you pay on time, it’s interest-free. But missed payments can lead to penalties, damaged credit (especially if providers report to credit bureaus), and snowballing balances. Add inflation, wage stagnation, and other household debt—and it’s a formula that deserves more scrutiny, not less.

If you’re among the 1.1 million users with more than £500 in BNPL debt—or just feel overwhelmed—it’s important to know what protections are being introduced.

Once the rules are in place, BNPL providers will be legally obligated to:

• Support customers in financial difficulty
• Freeze interest or charges where appropriate
• Help restructure payment plans
• Escalate unresolved issues to the Financial Ombudsman

In the meantime, you don’t have to wait for regulation to get support. StepChange, National Debtline, and Citizens Advice already offer free guidance. And many providers have hardship options—you just have to ask. The danger is silence. Missed repayments without communication often trigger more aggressive collections, fees, or black marks on your credit file.

Rather than treating BNPL as a workaround for shortfalls, consider giving it its own space in your budget. A few guardrails can keep it useful—not risky.

1. Set a BNPL cap: Limit BNPL spending to 5–10% of your monthly discretionary budget (after rent, bills, savings). If your fun money is £200, your BNPL room is £10–20—total.

2. Consolidate platforms: Stick to one BNPL provider so you can track due dates and balances easily. Multiple apps = multiple blind spots.

3. Calendar repayments: Mark each payment date in your phone’s calendar or use reminders. BNPL default risk is less about high debt—and more about missed visibility.

4. Audit monthly: Once a month, tally how many BNPL purchases you have active. Are you still comfortable? Still in control?

This isn’t about guilt. It’s about choice. A budget that includes BNPL is better than one that hides it.

The FCA’s own data shows that BNPL use is highest among people aged 25–34 and those living in more economically deprived areas. That overlap matters. If you’re already facing tight housing costs, variable income, or higher exposure to inflation, BNPL can be a helpful buffer—but also a quiet amplifier of risk.

Affordability checks may sound paternalistic. But they help prevent silent spirals. When income is tight, even a £10 missed payment can trigger a domino effect across utilities, rent, or food budgets. The goal of regulation is not to deny access—it’s to prevent damage. And that’s most crucial for those already under financial strain.

The FCA’s proposals won’t take effect until mid-2026. But their logic is immediate: if BNPL is credit, it must carry the same guardrails as any other form of lending. That shift isn’t anti-innovation. It’s pro-stability. Borrowers deserve clarity. They deserve protection. And they deserve lending systems that notice when the risk pattern changes—not after the damage is done.

So if you’re using BNPL, treat it with the respect of a credit product, not the casualness of a shopping feature. Because how you use it today sets the tone for what your financial system can handle tomorrow. And when friction feels like a problem—it often means it’s the feature.