UK Government Unveils Buy Now, Pay Later Rules

The UK government has announced new regulations for 'buy now, pay later' (BNPL) products to protect consumers, but these changes will not take effect until 2026. The new rules will require BNPL companies, such as Klarna and Clearpay, to conduct affordability checks on borrowers and provide clear information about the risks of taking on debt. Martin Lewis, a financial expert, welcomed the measures but cautioned that consumers should remain cautious until the regulations are implemented, as BNPL has often been marketed as a lifestyle choice rather than a form of debt. The regulations will also incorporate protections similar to those existing for credit card purchases, allowing users to seek redress more easily. Treasury Minister Tulip Siddiq acknowledged the previous government's delays in regulation, emphasizing the urgent need for consumer protections in light of the growing popularity of BNPL amidst the cost of living crisis. Critics warn that the delay in enforcement could leave consumers vulnerable to accumulating unmanageable debt in the interim.