From 15 July 2026, the rules around Buy Now Pay Later (BNPL) will change. If you’ve used services like Klarna, PayPal, Clearpay or Laybuy to split purchases into three or four payments, those agreements are about to come under full financial regulation.
That’s good news for consumers, but it’s important to understand what’s changing, what isn’t, and where you may (and may not) have a claim.
Why are the rules changing?
In 2021, the Financial Conduct Authority-commissioned Woolard Review warned that BNPL products were growing rapidly but sitting largely outside regulation.
Many “Pay in 3” agreements were structured to avoid regulation under the Consumer Credit Act 1974 (CCA). Because they were:
- Interest-free
- Repaid in 12 or fewer instalments
- Paid back within 12 months
They were exempt from most consumer credit rules.
That meant:
- No formal affordability checks in the way you’d expect with a loan or credit card
- No automatic right to take complaints to the Financial Ombudsman
- No section 75 protection in most cases
From 15 July 2026, most third-party BNPL lenders will move inside regulation.
Which BNPL brands operate in the UK?
The main third-party BNPL providers in the UK include
- Klarna – offers “Pay in 3”, “Pay in 30 days” and longer-term finance.
- Clearpay – offers “Pay in 4” over six weeks.
- PayPal – offers “Pay in 3” alongside other regulated credit products.
- Laybuy – Previously more active in the UK with weekly instalments.
It’s important to note that:
- If the lender is separate from the retailer, the agreement is likely to fall within the new regulatory regime from July 2026.
- If the retailer itself is providing the instalment plan (sometimes called “merchant credit”), it may remain outside the new rules.
The identity of the lender matters.
What’s changing from 15 July 2026?
BNPL agreements provided by third-party lenders (where the lender is separate from the retailer) will become regulated credit agreements.
This means:
- Proper affordability checks
Lenders must assess whether you can realistically afford the repayments, particularly if you’re taking out multiple agreements.
- Clearer information
You should receive clearer explanations about:
- What you’re agreeing to
- What happens if you miss payments
- How it may affect your credit file
- Support if you’re in financial difficulty
Firms must treat customers fairly if they fall into difficulty and offer appropriate forbearance.
- Ombudsman access
You’ll be able to take complaints to the Financial Ombudsman Service if the lender doesn’t resolve your issue properly.
- Potential section 75 protection
Where the agreement qualifies under section 75 of the Consumer Credit Act, the lender may share responsibility with the retailer for:
- Goods not delivered
- Faulty goods
- Misrepresentation
This is a significant shift in consumer protection.
What isn’t changing?
It’s important to be clear:
- Agreements taken out before 15 July 2026 will generally remain exempt.
- Instalment plans offered directly by retailers (merchant credit) may still fall outside the new regime.
- Not every purchase will qualify for section 75 protection, transaction value and agreement structure matter.
So timing and product type are crucial.
What should consumers be aware of?
- BNPL is still credit
Even if it feels like a budgeting tool, it is borrowing. Missed payments can:
- Lead to collections activity
- Affect your credit file
- Escalate quickly if you have multiple agreements
- Stacking agreements increases risk
Many people use several BNPL plans at once. Individually they may seem manageable, together they can become unaffordable.
Under the new rules, lenders should take this into account. If they don’t, that could form the basis of a complaint.
- Disputes about goods are not always lender disputes
If an item is faulty or not delivered, your first port of call is still the retailer under consumer rights law.
However, under regulated agreements, the lender may also share responsibility in qualifying cases.
When could someone potentially have a claim?
From 15 July 2026 onwards, there may be grounds for complaint where:
- You were given multiple BNPL agreements that were clearly unaffordable
- A lender failed to carry out proper affordability checks
- You were in financial difficulty and were not treated fairly
- Incorrect defaults or arrears were recorded on your credit file
- A qualifying purchase was not delivered and the lender refused responsibility
Each case depends on the facts. Not every rejected refund or retail dispute will be a valid financial claim.
Who is unlikely to have a claim?
- Consumers with agreements taken out before the rule change
- Simple retail complaints where the retailer has complied with the law
- Cases where repayments were affordable and correctly administered
This isn’t a repeat of PPI-style mass redress. It’s about responsible lending and fair treatment.
The bigger picture
These changes recognise that BNPL has become mainstream credit. The regulation aims to:
- Prevent unaffordable or Irresponsible lending
- Protect vulnerable consumers
- Bring BNPL in line with other regulated borrowing
If lenders fail to meet those standards after 15 July 2026, consumers will have stronger rights, and clearer routes to challenge unfair treatment.
Concerned about Irresponsible Lending?
If lenders fail to meet those standards after 15 July 2026, consumers will have stronger rights, and clearer routes to challenge unfair treatment.
In the meantime, if you believe:
- You were lent money you couldn’t afford to repay
- Your credit file has been unfairly affected
- A regulated lender has failed to treat you fairly
You may be entitled to challenge it. https://claimmyloss.co.uk/irresponsible-lending-claims/
You can start your claim here: https://claimmyloss.co.uk/start-my-claim/
