An upcoming change will affect all users of services like Clearpay, Klarna, Zilch, and Laybuy
A rule change is set to take effect soon in a major update for anyone using ‘buy now, pay later’ (BNPL) schemes online. It comes as the UK government has officially confirmed that stronger consumer protections will apply to BNPL agreements, including stricter checks.
The move will bring most BNPL services under regulation from July 15, 2026 – which is about 20 weeks away. The change, announced in February 2026 and following plans first introduced in 2021, aims to align BNPL products with other forms of credit.
BNPL schemes typically allow purchases to be split into interest-free instalments. Some of the most widely used services include Clearpay, Klarna, Zilch and Laybuy. Over 10 to 11 million people in the UK regularly use BNPL services.
The major change for shoppers is the application of Section 75 protection to most BNPL agreements. This crucial provision means that, for purchases between £100 and £30,000, the BNPL provider will be jointly liable with the retailer.
Consumers will gain the right to claim a refund directly from the BNPL provider if goods are faulty, not delivered, or the retailer ceases trading. Currently, BNPL schemes are not regulated by the Financial Conduct Authority (FCA), meaning they do not offer Section 75 protection, unlike credit card purchases.
Under the new rules, BNPL shoppers will be able to escalate complaints to the Financial Ombudsman Service (FOS) if they have issues with a BNPL provider or purchase. Customers will also benefit from “fairer and faster” access to refunds.
The new legislation imposes strict requirements on BNPL providers. Firms will be required to conduct upfront affordability checks to ensure shoppers can manage the debt they are taking on.
Historically, many providers, including Klarna, PayPal, and Zilch, have only run soft credit checks. Firms have not been mandated to run affordability assessments either.
Lenders must also follow consistent standards. This is intended to give shoppers clear information on how each product differs in terms of repayments, late fees, and credit checks, an area where concerns have been raised due to multiple BNPL options often appearing at online checkouts.
Providers will also be required to offer support to customers in financial difficulty and direct them towards free debt advice where appropriate. This addresses previous concerns that many BNPL customers do not realise they are taking on debt or consider the consequences of missing repayments, including late fees and damage to credit scores.
How can I stay safe while using buy now pay later schemes?
When using Buy Now, Pay Later (BNPL) plans, it’s important to treat them as debt rather than “free money”, as echoed by the likes of Martin Lewis. Even though they are easy to use, BNPL can lead to overspending, late fees, and could hurt your credit score. To use BNPL safely, you need to keep an eye on your budget, track your payments, and understand the rules of each service.
Advice issued by consumer champion, Which?, recommends: “Always read the T&Cs carefully. Set up alerts for repayments. Draw up a budget. Make any returns promptly. Contact the BNPL provider if you think you might miss a repayment.”
Ensure our latest headlines always appear at the top of your Google Search by making us a Preferred Source. Click here to activate or add us as your Preferred Source in your Google search settings.
