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The Financial Conduct Authority has announced plans to bring the UK’s £13 billion buy now, pay later market under its regulatory umbrella. Firms such as Klarna, which let consumers split purchases into interest-free instalments, will face mandatory affordability checks, rules on creditworthiness and access to the Financial Ombudsman. These changes arrive amid concerns that young people are stacking short-term loans without proper safeguards.
Buy now, pay later schemes let customers receive goods immediately and spread payment over several months without interest. These services currently operate outside FCA oversight, so no formal credit checks are required before approval. The FCA now proposes mandatory affordability assessments, even for transactions under £50, to curb loan-stacking and protect borrowers from unmanageable debt.
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