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UK Government Introduces Legislation to Regulate Buy Now, Pay Later Sector

New rules laid in Parliament will enforce affordability checks, faster refunds, and greater transparency to protect consumers from debt risks starting next year.

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Overview

  • The UK government has formally laid legislation in Parliament to bring Buy Now, Pay Later (BNPL) services under Financial Conduct Authority (FCA) regulation and the Consumer Credit Act.
  • The new rules, set to take effect next year, will mandate affordability checks to ensure borrowers can repay and provide faster refunds for shoppers.
  • BNPL firms will be required to disclose late fees, explain potential credit-rating impacts, and direct customers to debt-help resources.
  • Consumer groups, including Citizens Advice, have praised the changes as critical for protecting the 10 million UK users from unmanageable debt.
  • Major BNPL providers, such as Clearpay, have expressed support for the regulation, viewing it as a foundation for sustainable growth in the sector.