UK BNPL rules take effect: refunds, rejections, and loan shark fears

Credit reference agency Experian estimated more than 100 million BNPL transactions were made by 8.5 million customers in 2025, worth over £7 billion. Of that, 98.5% of balances were repaid on time.

Klarna, which said its average customer is 38, supported the regulation. "The FCA's rules largely formalise what we already do," a spokesman said. "Interest-free buy now pay later is a simpler, fairer, lower-cost alternative to revolving credit."

Debt charities welcomed the changes after years of delay. They urged caution. Matthew Sheeran of Money Wellness said people were increasingly spreading smaller purchases across multiple BNPL agreements. "Our concern isn't Buy Now Pay Later itself," he said. "It's what can happen when people begin relying on multiple forms of credit simply to make ends meet."

Tim Riesner owed £24,000 across loans, credit cards, and BNPL after losing his construction job due to eyesight problems. He described how the debt crept up. "It didn't feel like debt. It felt like convenience. You're buying something online and it says 'split it, pay later'. You think you're being sensible. You can have multiple plans running at once."

Jack Sporcic of National Debtline said: "We are urging consumers to treat Buy Now Pay Later in exactly the same way as any other form of borrowing."

Some retailers' in-house BNPL products fall outside the new regulation. The FOS expects to handle about 2,000 BNPL complaints by the end of March.