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UK Buy Now Pay Later lenders face FCA authorization under new rules
The Financial Ombudsman Service expects to handle about 2,000 unresolved BNPL complaints by end of March 2026, as lenders add transaction-level affordability checks.
BBC Business reports that new UK rules for Buy Now Pay Later services take effect from Wednesday, requiring BNPL lenders to have Financial Conduct Authority authorization to operate.
The changes are intended to strengthen consumer protections, including access to refunds and independent rulings through the Financial Ombudsman Service for unresolved complaints.
The FOS expects to deal with about 2,000 cases by the end of March, as regulators say stricter oversight should reduce the risk of consumers taking on unaffordable debt and being hit by late payment fees.
Not-for-profit Fair4All Finance, according to BBC Business, estimates 10% to 30% of BNPL users could fail each lender's conservative affordability checks, potentially resulting in some customers being refused despite not missing prior BNPL payments.