Shoppers using Buy Now Pay Later (BNPL) services have stronger rights but some will be refused loans, as new rules come into effect.
From Wednesday, BNPL lenders must have regulator approval to operate, giving shoppers more access to refunds and independent rulings on unresolved complaints if things go wrong.
Providers such as Klarna and Clearpay have become huge operators allowing consumers to pay in interest-free instalments, but campaigners have often described the wider sector as an unregulated Wild West.
There are fears that new affordability checks on each BNPL transaction will leave some blocked for the first time, pushing them towards “thrilled” loan sharks instead.
“While regulation is clearly needed and welcomed, our recent research found that nearly half of those likely to be rejected have not missed a BNPL payment,” said Kate Pender, chief executive of not-for-profit Fair4All Finance, which promotes fair and accessible financial services.
“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.”
Tim Riesner was among those who took out various loans, including BNPL, only to face problems when his life changed.
“It didn’t feel like debt. It felt like convenience. 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,” he said.
“Before you know it, it’s thousands. Add in loans, credit cards, bits of finance here and there, and suddenly I owed £24,000.”
His finances unravelled after having to give up well-paid work in construction after suffering problems with his eyesight.
“Nobody should have any sympathy for me at all. I’m an adult. I knew what I was doing. The responsibility lies with me. However, advertising is very seductive. It draws you in, because the society that we live in is the society that says you can have it, and you can have it right now,” he told the BBC.
After a tough and dark period, he spoke to charity Business Debtline, where staff helped him to go through his debts, organise a Debt Relief Order, and he is now well on his way to being debt-free.
Jack Sporcic, debt adviser at National Debtline, said: “We are urging consumers to treat Buy Now Pay Later in exactly the same way as any other form of borrowing.
“We often see people using Buy Now Pay Later for everyday essentials such as food, energy bills and household basics.”
Credit reference agency Experian, which already receives data voluntarily from some providers estimated that more than 100 million BNPL transactions were made by 8.5 million customers in 2025, worth more than £7bn in spending.
Of that spending, 98.5% of balances were repaid on time, it said.
Leading BNPL providers have supported regulation of the sector, albeit with calls to allow them to innovate.
“The FCA’s rules largely formalise what we already do – we run affordability checks, show costs upfront and report to credit reference agencies,” said a spokesman for Klarna, which says the average age of its customers is 38.
“Interest-free buy now pay later is a simpler, fairer, lower-cost alternative to revolving credit. Robust regulation that gives consumers added confidence and strengthens their access to protections is a good thing.”
