UK introduces affordability checks for BNPL services

New rules for BNPL services

The UK has formally regulated Buy Now Pay Later (BNPL) services as of July, bringing them under the oversight of financial authorities. Lenders such as Klarna and Clearpay must now obtain regulatory approval to operate, conduct affordability checks on users, and provide clearer refund options and independent complaint resolutions.

How affordability checks work

Affordability checks vary depending on the amount borrowed, with lenders assessing a user’s ability to repay before approving transactions. Shoppers who fail these checks may be blocked from using BNPL services for future purchases. The rules aim to reduce overspending but could limit access for some consumers.

Support for struggling users

Debt charities like Citizens Advice and tools such as MoneyHelper are available for individuals facing difficulties with BNPL repayments. MoneyHelper offers resources, including debt advice locators, benefit eligibility tools, and budgeting planners to help users manage repayments. Sara Williams, a former debt adviser at Citizens Advice and founder of the Debt Camel advice platform, suggests shoppers assess whether purchases are essential before using BNPL.

What this means

Lazyfounder analysis — our interpretation, not reported fact.

These regulations mark a significant shift in how BNPL services operate in the UK, introducing consumer protections that align them more closely with traditional credit products. For founders and operators, this sets a precedent for how short-term credit products may be regulated in other markets, including India, where BNPL adoption is growing. The requirement for affordability checks could also increase operational costs for lenders, potentially reducing approval rates and impacting transaction volumes. However, the added transparency and complaint mechanisms may improve long-term trust in the sector.

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