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UK BNPL rules take effect, consumer groups warn of more rejections
New regulations for buy now, pay later services came into force in the UK on 15 July, enhancing consumer protections but potentially leading to more credit rejections, according to advocacy groups.
The UK's new 'buy now, pay later' (BNPL) rules officially took effect on 15 July, introducing mandatory affordability checks and clearer terms for borrowers. The regulations, which apply to all BNPL providers, aim to close a loophole that previously exempted these products from standard consumer credit laws.
Consumer groups have warned that the stricter requirements could result in a higher number of applicants being denied BNPL credit. Some shoppers who previously would have been automatically approved may now face rejection if they fail affordability assessments.
The rules mandate that lenders assess a customer's ability to repay without causing financial harm, mirroring obligations for traditional credit cards and loans. Providers must also ensure that terms and conditions are transparent, and customers have access to the Financial Ombudsman Service for complaints.
Industry estimates suggest millions of UK consumers regularly use BNPL services, particularly for online purchases of fashion, electronics, and other goods. The changes are part of a broader regulatory push to protect vulnerable borrowers from unmanageable debt.