BNPL Rules 2026 UK: What Changes on 15 July, and What Still Isn't Protected

From 15 July 2026 the Financial Conduct Authority regulates third-party Buy Now Pay Later, known in legislation as Deferred Payment Credit. Lenders must check you can afford repayments, tell you clearly what you are agreeing to, support you if you fall into difficulty, and answer to the Financial Ombudsman Service if things go wrong.

What the headlines have been less clear about is where the new rules stop. Merchant own credit is carved out. Any plan you opened before 15 July 2026 stays unregulated for its whole life. The reason the reform came now is that the market grew from £0.06 billion in 2017 to over £13 billion in 2024, per the FCA's Policy Statement PS26/1.

This article covers both sides: what the new protections actually give you, and what still is not covered so you do not assume you are protected when you are not.

This is general information about the FCA's new rules on Deferred Payment Credit. It is not personal financial advice or regulated debt advice.

What changes on 15 July 2026

The FCA's final rules for Deferred Payment Credit are set out in Policy Statement PS26/1, published in 2025 and taking effect on regulation day, 15 July 2026. The FCA's consumer page on Buy Now Pay Later summarises what this means for people using the product day to day.

Affordability checks before you borrow

The FCA states that lenders "must check whether you can afford to repay before you take out a DPC agreement." That check has to happen before the plan is offered, not after you have already agreed to it. The aim is that fewer people take on payments they cannot sustain, and that firms lend responsibly.

Clearer information at checkout

Before you take out a DPC agreement, the lender must give you the amount to be borrowed, when the repayments are due, the size of each repayment, the amount of any late fee, and the rights and protections available to you. That information has to be given upfront, not buried in a confirmation email after the purchase.

Support if you fall behind

If you miss a repayment, the FCA states that firms "must contact you, let you know, and explain what this means." If you are already struggling, the lender must provide support under FCA rules on treating customers in financial difficulty fairly.

Complaint route through the Financial Ombudsman

If you are unhappy with how the lender has treated you, you complain to the lender first. If you are unhappy with the response, you can take the complaint to the Financial Ombudsman Service. Before 15 July 2026, DPC was outside this route entirely.

Section 75 refund rights

For the first time, Section 75 of the Consumer Credit Act 1974 applies to regulated DPC. That means if something you bought using BNPL is faulty, misdescribed or never delivered, you can claim a refund from the lender in the same way you would with a credit card. This is the single biggest consumer upgrade in the whole reform, and it is covered in more detail further down.

Which BNPL agreements are covered

The scope test in PS26/1 is narrower than most headlines suggest. Not every "pay later" checkout button will be regulated on 15 July 2026.

What Deferred Payment Credit actually means: an interest-free credit product, repayable in 12 or fewer instalments, and repayable within 12 months or less. That covers the classic Klarna, Clearpay and PayPal Pay in 3 style checkout products. It does not cover interest-bearing point-of-sale finance, which is a different, already regulated product.

In scope from 15 July 2026

Source: FCA consumer page on Buy Now Pay Later, last updated 6 August 2026.

The merchant own credit gap

This is the biggest thing consumers are getting wrong about the new rules. The FCA's press release confirming the final rules says plainly: "Suppliers that provide their own credit will remain exempt from regulation. The exemption of 'merchant own credit' was a Government decision made in 2024."

In plain English: if the shop is also the credit provider, none of the new FCA protections apply. No affordability check duty, no Financial Ombudsman route, no Section 75 refund right against the lender because the lender is the shop.

You often cannot tell which structure a checkout is using just by looking at it. The safer approach is to look at the terms and conditions before you tick the box. If the "pay later" credit provider is a separate company from the shop, you are almost certainly in scope. If the shop is the credit provider, you are not.

Plans opened before 15 July 2026

Any DPC agreement entered into before 15 July 2026 remains unregulated. The FCA's consumer page is direct on this: "Any DPC agreement taken out before 15 July 2026 remains unregulated; the new protections do not apply."

The reason matters. Bringing a whole class of existing agreements retroactively into regulation would create legal complications and would not sit comfortably with the way UK consumer credit law usually works. So the FCA drew a line at regulation day. Agreements from that day forward are in. Agreements before that day are not.

In practical terms, this means:

• If you opened a Clearpay plan on 10 July 2026 and defaulted in August 2026, that plan is still unregulated. No affordability duty on the lender, no Financial Ombudsman route, no Section 75.
• If you had six live BNPL plans on 14 July 2026, all six stay unregulated until they either finish or you close them.
• If you open a new plan with the same lender on 16 July 2026, that new agreement is regulated. But the older ones are not.

If BNPL is already stacking up and you have several live plans opened before regulation day, the fact that new plans are protected does not help you with the ones already outstanding. Those still fall under the old, unregulated regime, and the same steps that helped before the reform still apply: list every plan, list every next-due date, and stop opening new ones while you work out what is affordable. If a plan defaults into collection activity, our article on UK token payments covers how to reduce repayments when you cannot afford them.

The Section 75 upgrade

For regulated Deferred Payment Credit from 15 July 2026, Section 75 of the Consumer Credit Act 1974 applies. The FCA's consumer page explains: "If something goes wrong with something bought using DPC, you may be able to get a refund from the lender. This is because Section 75 of the Consumer Credit Act is available. This is the same protection you would have if you used a credit card to pay instead."

Before this reform, BNPL users had no equivalent of Section 75. If you bought a broken laptop with Klarna and the retailer refused to refund, Klarna was not jointly liable for the refund the way a credit card issuer would be. From 15 July 2026, for regulated agreements, that changes.

Section 75 is a genuinely powerful right. It makes the lender jointly liable with the retailer for a breach of contract or misrepresentation on qualifying purchases. In practical terms, if the retailer disappears or refuses to sort out a faulty product, you can go to the BNPL lender instead. The lender then has to deal with you, not point at the shop.

Two things to keep in mind, though:

• Only for regulated agreements. If your plan is pre-15-July-2026, or it is merchant own credit, Section 75 does not apply because the credit is not regulated.
• Same monetary thresholds as credit cards. Section 75 applies to items where the cash price of a single item is more than £100 and no more than £30,000. That covers most electronics, appliances, furniture and travel, but not the £45 t-shirt.

Firms on the Temporary Permissions Regime list

Not every BNPL lender was fully authorised by the FCA on 15 July 2026. The FCA set up a Temporary Permissions Regime so firms could keep offering DPC while they applied for full authorisation. According to the FCA press release, firms could register between 15 May 2026 and 1 July 2026, and have six months from regulation day to apply for full authorisation.

The FCA's own consumer page lists the firms currently on the Temporary Permissions Regime. As of the FCA's page update on 6 August 2026 that list includes:

• Access Fertility (Access Fertility Ltd)
• Cashbox (Tameside Credit Union)
• Clearpay (Clearpay Finance Ltd)
• Manchester Credit Union
• Medicred (Medicred Ltd)
• The Money Co-op (Metro Moneywise Credit Union)
• Oldham Credit Union
• PayItMonthly (PayItMonthly Ltd)
• PLIM (PLIM Ltd)
• PollenPay (PollenPay UK Ltd)
• Remedi Finance (Remedi Finance Ltd)
• Salford Credit Union Limited
• South Manchester Credit Union
• Zero Down Lease (Leasehold Finance Ltd)
• Zeropa (Zeropa Holdings Ltd)

Firms in the Temporary Permissions Regime are not yet fully authorised by the FCA, but are permitted to provide DPC agreements while their application is decided. Agreements they enter into from 15 July 2026 must still follow the FCA's rules.

You can check any UK financial services firm on the FCA's Financial Services Register. If a lender is neither fully authorised nor on the Temporary Permissions Regime list, be cautious before entering into a new agreement with them.

If you miss a BNPL payment

The result of a missed BNPL payment depends on the provider, the agreement and how quickly you deal with it. It may include late fees, account restrictions, referral to a debt collector or a marker on your credit file. StepChange states that falling behind can put you in debt to the BNPL company, and the company may add fees or start debt collection action depending on the circumstances.

The consumer group Which? has warned that missing BNPL repayments can leave a mark on a credit report for six years, so it is important to know when payments are due and what happens if you miss them.

Practical steps if a payment is close to being missed:

• Check the provider's app or website first for the missed amount, the fee position and the next due date.
• Contact the lender as early as you can and explain your position honestly. Under regulated DPC, the lender must offer support if you are in financial difficulty.
• Do not open another BNPL plan to cover the missed one. That usually makes the next month worse, not better.
• If the missed payment is one of several stacking issues, list every repayment across every provider first. The total across the next 30 days matters more than any single payment.

If BNPL repayments are becoming difficult, the article on UK token payments covers the standard route for reducing repayments when your income cannot cover the current agreed amount. If repeat spending is feeding the problem, the article on how to control your spending covers the money habits that keep it going. If you want to formally complain about how a regulated DPC lender has treated you, the guide on how to complain about a bank or debt collection agency walks through the process.

Using BNPL more safely

If you use BNPL, keep it boring and controlled:

• Use one plan at a time where possible. The problem is rarely one plan. It is five plans landing in the same week.
• Do not use BNPL for essentials like rent, council tax, energy, food or fuel. If normal bills need splitting into instalments, the issue is the budget, not the shop.
• Set calendar reminders for every repayment.
• Read the late-fee terms before you agree.
• Avoid BNPL when your income is uncertain or dropping.
• Do not use one form of credit to keep up with another.
• Add up your total repayments for the next 30 days before opening anything new.

The FCA's Policy Statement PS26/1 notes the sheer scale of the UK market when explaining why the new rules were brought in: DPC lending grew from £0.06 billion in 2017 to over £13 billion in 2024. The FCA's Financial Lives 2024 survey found 20% of UK consumers, around 10.9 million adults, used BNPL in the 12 months to May 2024. This was never a niche product.

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