Big changes are coming for Buy-Now, Pay-Later (BNPL) in the UK. Earlier this month, HM Treasury announced that the days of BNPL operating like the “wild west” are numbered. Starting next year, the sector will face proper regulation, bringing millions of shoppers stronger protections and giving fintechs a clearer rulebook to grow from.

Over 10 million people in the UK currently use BNPL products. Until now, they’ve had little in the way of safety nets if things went wrong; no affordability checks, no ombudsman support, and often confusing refund processes. That’s about to change.

What’s actually changing?

Under the new rules, BNPL providers will need to play by the same rules as other consumer credit firms. That includes:

• Upfront affordability checks to stop unaffordable borrowing
  
  
• Clearer information so users know exactly what they’re signing up for
  
  
• Faster access to refunds when purchases go wrong
  
  
• The right to complain to the Financial Ombudsman Service

This is all part of the government’s broader Plan for Change, aimed at modernising consumer finance and giving households more financial stability. According to Economic Secretary Emma Reynolds, the reforms are designed to protect working people while helping BNPL firms grow with confidence.

Out with the old, in with the flexible

The changes don’t stop at BNPL. The government is also reforming the 50-year-old Consumer Credit Act; replacing it with a more modern and flexible framework. Oversight will shift to the Financial Conduct Authority (FCA), cutting outdated red tape while keeping consumer protection front and center.

For fintech founders, this shift is big. It signals a move toward clearer rules, more regulatory certainty, and a level playing field for newer products like BNPL. The consultation on this kicked off in late 2024, and now the government is following through – with legislation already being laid in Parliament.

Key takeaways for fintech startups

Here’s what this regulatory shift means for founders and fintech teams working in or around BNPL:

• BNPL regulation is coming: Start preparing now if you offer or plan to offer split-payment products.
  
  
• Affordability checks will be non-negotiable: Creditworthiness tools or partnerships will be key.
  
  
• Stronger consumer protections = more trust: Faster refunds and formal complaint rights could boost user confidence and brand reputation.
  
  
• Regulatory clarity helps with growth: Investors and partners are more likely to back products that are FCA-compliant.
  
  
• The Consumer Credit Act overhaul matters: Fintechs working with lending, credit, or payment innovations should track these reforms closely; it could impact your entire roadmap.
  

These aren’t just rules to follow. They’re guardrails that could help the BNPL model mature and scale sustainably.

Need help adjusting your strategy or staying compliant? Talk to us. We help fintech startups grow.