Buy Now, Pay Later (BNPL) services officially fall under Financial Conduct Authority (FCA) regulation from Wednesday, bringing new rules for all UK users. Research from Loqbox highlights the timeliness of this change, revealing that BNPL usage among its customers increased by 3,793% between 2020 and 2025, while 85% of consumers were unaware the new rules were coming.
Widespread Misunderstanding Among Gen-Z
Loqbox's own research found significant misunderstanding among Gen-Z consumers regarding how BNPL affects their credit scores. Over half either think spreading the cost with BNPL does not affect their credit score, or are not sure if it does. BNPL has become a default payment method for many younger consumers, used for fashion hauls, beauty buys, and big-ticket home purchases. It appears as just another payment button, but it has always been a form of credit, operating within a regulatory grey area without the same checks and protections as credit cards and loans.
New Rules Aim to Fix Regulatory Gaps
The new rules aim to address these gaps, but they will not magically prevent people from getting into trouble. Dani Palmer, Consumer Finance Expert at Loqbox, said: “Many younger consumers don’t actually think of Buy Now, Pay Later as credit at all. Unlike a traditional loan or credit card application, it’s typically presented as just another payment option at checkout, sitting alongside cards and digital wallets. When it’s attached to brands people know, trust and aspire to buy from, it is easy to forget you are entering into a credit agreement at all. But that is exactly what you are doing, and for years, BNPL has operated without the consumer protections that every other form of credit has to meet.”
With one month to go until services finally fall under FCA regulation, those working in responsible consumer finance are celebrating the change. However, the arrival of regulation is also a moment to take stock of what it will and will not fix. Palmer added: “BNPL can be a genuinely helpful tool. Whether you’re replacing a broken washing machine or buying a birthday present for your dad a week before payday, it can smooth over life’s financial timing gaps. The trouble is when it becomes a regular way to get through the month. One purchase split across four payments sounds manageable; five purchases split across four payments each is a different story. That’s when things start to feel difficult to track.”
Key Changes Under FCA Regulation
The new rules aim to bring BNPL in line with other forms of credit. Key changes include: providing clear information upfront, proportionate affordability checks, proper support for people in difficulty, and a route to complain if something goes wrong. Under the shake-up, BNPL lenders will now have to carry out an affordability check before each loan is taken out. Firms will need to provide clear, upfront information, including when payments will be due and what happens if you miss one. BNPL users will benefit from section 75 protection on purchases above £100. Shoppers will be able to complain to the independent, free Financial Ombudsman Service if they have a problem.
Palmer concluded: “But even with clearer info and credit checks, BNPL can still snowball into debt that’s harder to manage than people expect. While the incoming rules are a great start, the conversation shouldn’t stop there.”
