Buy Now Pay Later rules to bring refunds and rejections
Summary
New rules require Buy Now Pay Later (BNPL) lenders to get approval from a financial regulator, giving shoppers better rights like refunds and help with complaints. However, some people may be refused BNPL loans because of checks that see if they can afford to pay, which could push them to use more risky lenders.Key Facts
- BNPL lenders now need Financial Conduct Authority (FCA) approval to operate.
- Customers can get refunds and compensation for items over £100 bought with BNPL, similar to credit cards.
- Unresolved BNPL complaints can be taken to the Financial Ombudsman Service for a decision.
- Shoppers must pass an automatic affordability check before using BNPL; if they fail, their purchase will be blocked.
- Lenders must provide clear loan information and direct borrowers to free debt advice if needed.
- Around 10% to 30% of BNPL users might fail these affordability checks.
- Some people rejected by BNPL may turn to more expensive or unregulated loan options.
- BNPL is very popular with 18 to 24-year-olds but is used by many age groups.
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