UK to Regulate Buy Now Pay Later Sector

The UK government has announced new regulations for the buy now, pay later (BNPL) sector, covering firms such as Klarna, Clearpay, and Affirm, with the rules set to take effect next year. The regulations will require BNPL providers to conduct upfront affordability checks, provide faster refunds, and allow consumer complaints to be escalated to the Financial Ombudsman. Regulatory oversight will shift to the Financial Conduct Authority (FCA), updating the longstanding Consumer Credit Act to better reflect modern lending practices. Consumer advocates, including Citizens Advice, have welcomed the move, citing cases of users incurring unaffordable debt and sometimes needing emergency support. BNPL companies have generally supported the regulations, seeing them as a means to foster clarity and responsible growth. Both government and industry stakeholders believe the rules will strengthen consumer protection while supporting innovation in the UK fintech sector.