Buy Now Pay Later (BNPL) Unaffordable Lending Claims
A note before you start (5 August 2026): most BNPL lending only became FCA-regulated on 15 July 2026. For agreements taken out before that date the routes to a claim are limited — the affordability rules and the Financial Ombudsman's compulsory jurisdiction did not apply to BNPL activity (Zilch, regulated since 2020, is the exception). We are confirming with our claim partner exactly which BNPL agreements they can take on, and will update these pages once that is settled. Until then, please treat these pages as guidance on where complaints stand rather than an invitation to claim on a pre-regulation agreement.
Buy Now Pay Later (BNPL) is the fastest-growing form of consumer credit in the UK — used by an estimated 14 million adults in 2024, with around £15 billion of BNPL transactions a year. Until now it has sat almost entirely outside FCA regulation, with no formal affordability requirements, no compulsory FOS jurisdiction, and no Section 75 protection. From 15 July 2026 — Regulation Day — that changes. This hub page sets out the BNPL landscape, where complaints stand for both pre- and post-Regulation Day lending, and links to the individual BNPL operator pages.
In this guide
- What BNPL is — and what counts as a regulated agreement
- The major UK BNPL providers
- What changes on 15 July 2026
- Pre-Regulation Day BNPL agreements
- Common patterns in BNPL complaints
- How a BNPL complaint works (post-Regulation Day)
- The Section 75 dimension
- BNPL alongside other credit problems
- Frequently asked questions
- Related guides
- Our Partner's Fees Explained
- Check If You Could Be Owed Compensation
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What BNPL is — and what counts as a regulated agreement
Buy Now Pay Later in its dominant UK form is “deferred payment credit” (DPC) — interest-free credit, repayable in 12 or fewer instalments over 12 months or less, offered to consumers at the point of purchase. Under the existing Consumer Credit Act framework, this type of credit was specifically excluded from regulation by an exemption that was originally designed for retailers offering instalment plans on their own goods. The exemption was never updated when third-party fintech BNPL operators (Klarna, Clearpay and similar) emerged at scale.
From Regulation Day (15 July 2026), the exemption is narrowed. Third-party DPC — credit provided by an entity that is not the merchant — comes into FCA scope. The framework was set out in HM Treasury’s 2021 Woolard Review, the FCA’s consultation papers in 2024-2025, and the final Policy Statement PS26/1 published on 11 February 2026.
After Regulation Day, third-party BNPL is regulated consumer credit. Before Regulation Day, third-party BNPL is generally unregulated — even where the same operator, the same product and the same customer are involved.
The major UK BNPL providers
Most UK BNPL volume runs through four operators:
- Klarna — Klarna Financial Services UK Limited. FRN 987889 (consumer credit) and FRN 1021834 (EMI). Offers Pay in 3, Pay in 30, Klarna Card and Term Loans. Klarna Card and Term Loans are regulated; the BNPL products come under regulation from 15 July 2026.
- Clearpay — UK brand of Afterpay, owned by Block, Inc. (formerly Square). Pay in 4 product. Currently unregulated; comes into scope from 15 July 2026.
- PayPal Pay in 3 — PayPal’s UK BNPL launched October 2020. Pay in 3 product. Currently unregulated; comes into scope from 15 July 2026.
- Zilch — uniquely, Zilch has held FCA consumer credit authorisation since November 2020. Its lending has been regulated from launch. Compulsory FOS jurisdiction has applied throughout.
Other significant BNPL or BNPL-adjacent operators in the UK market include:
- Laybuy — entered administration June 2024; customer base sold to Klarna August 2024.
- Tabby — primarily MENA-focused, limited UK consumer presence.
- DivideBuy — now operated by Zopa Bank Limited (FRN 800542) following acquisition February 2023. Retail finance focus on higher-ticket purchases.
What changes on 15 July 2026
Regulation Day brings third-party DPC into the FCA framework. From that date, for new BNPL agreements:
- CONC 5.2A creditworthiness assessment applies — providers must carry out reasonable and proportionate affordability checks before lending.
- Pre-contract information requirements apply — full disclosure of the credit terms before the customer commits.
- DISP rules on complaints handling apply — including the eight-week response window under DISP 1.6.2R.
- Compulsory FOS jurisdiction extends to BNPL — customers can refer complaints to the Financial Ombudsman free of charge.
- Section 75 of the Consumer Credit Act applies — for purchases over £100, the BNPL provider has joint and several liability with the merchant for goods that turn out faulty, undelivered or misdescribed.
- CONC 7 forbearance rules apply — appropriate treatment of customers in arrears.
The Temporary Permissions Regime (TPR) for BNPL operates between 15 May and 1 July 2026. Existing unauthorised BNPL operators who applied for TPR by 1 July 2026 can continue trading post-Regulation Day while their full authorisation application is processed.
Pre-Regulation Day BNPL agreements
For BNPL agreements taken out before 15 July 2026, the position is much more limited:
- CONC 5.2A creditworthiness rules don’t apply to the BNPL activity.
- FOS’s compulsory jurisdiction over the activity doesn’t apply.
- Section 75 doesn’t apply.
- Operators may have voluntary internal complaints processes — outcomes vary.
- Section 140A of the Consumer Credit Act and other common-law routes can sometimes apply, depending on facts.
There is one important exception — Zilch. Because Zilch held FCA authorisation from November 2020, the regulated framework has applied to all its lending throughout. Zilch complaints can use the standard CONC and FOS route regardless of date.
Common patterns in BNPL complaints
Issues that appear across the major BNPL operators (and that complaints highlight):
- Multiple parallel BNPL agreements — Klarna Pay in 3 alongside Clearpay alongside PayPal Pay in 3 alongside Zilch, with no single provider having visibility of the customer’s total exposure.
- Younger and lower-income customers — using BNPL as a substitute for affordable mainstream credit, often where they would not have qualified for a credit card.
- Repeat use building up to unsustainable cumulative commitment — BNPL transactions individually small, but cumulatively producing a heavy monthly servicing burden.
- Late fees compounding small balances — late fees on a £30 BNPL balance can rapidly escalate the cost.
- Limited credit reference reporting historically — though all major UK BNPL operators have progressively been adding CRA reporting since 2023.
- Vulnerability indicators — gambling activity, recent benefits claims, returned direct debits visible from Open Banking data, but not always acted on.
- Auto-collection from linked payment methods — repayments collected without significant friction or affordability prompts.
How a BNPL complaint works (post-Regulation Day)
For agreements within the regulated framework — Zilch lending of any vintage, and other BNPL agreements from 15 July 2026 onwards:
- Eligibility check on the agreement(s), when they were taken, your circumstances at the time.
- Subject Access Request to the BNPL provider — produces application data, the affordability review, transaction history, vulnerability flags.
- Bank statements showing the BNPL pattern alongside other commitments.
- Statutory credit report.
- Complaint to the BNPL provider — eight-week response window.
- Escalation to the Financial Ombudsman if the response is unsatisfactory.
- Redress if successful — refund of fees and charges (BNPL is interest-free so no interest refund), 8% statutory interest on each refundable amount, credit-file correction, balance offset where applicable.
The Section 75 dimension
Section 75 of the Consumer Credit Act 1974 gives joint and several liability between the lender and the merchant for goods or services purchased on regulated credit, where the cash price is over £100 and not over £30,000, and the goods turn out to be faulty, undelivered or misdescribed. From 15 July 2026, this protection extends to regulated BNPL agreements.
For pre-Regulation Day BNPL, Section 75 does not apply. For Klarna Card purchases (regulated credit card), Section 75 has applied throughout. For Zilch lending, Section 75 has applied since the lending became regulated in November 2020.
BNPL alongside other credit problems
Many BNPL complainants also have unaffordable lending complaints elsewhere — payday loans, credit cards with persistent debt, catalogue credit, guarantor loans. Where the broader pattern shows a customer caught in a cycle of high-cost credit, the BNPL element is typically just one part. A combined approach — looking at all the credit relationships together — often produces a clearer affordability picture and stronger evidence.
Frequently asked questions
Can I claim about my Klarna or Clearpay BNPL from before July 2026?
The standard CONC and FOS route doesn’t apply to pre-Reg-Day BNPL. The provider’s own internal complaints process may consider it, and Section 140A unfair relationship court claims may be available depending on facts. For Klarna Card or Klarna Term Loans (regulated products), the standard route applies regardless of date. For Zilch, the standard route applies regardless of date.
I have multiple BNPL accounts across different providers — can I make one combined complaint?
No — each provider has to be complained to separately, because each is a separate regulated entity. But the affordability evidence (bank statements, credit file, the wider pattern) is the same across all of them, so a parallel approach with the same evidence is straightforward.
Will my BNPL appear on my credit file?
Increasingly yes. UK BNPL operators progressively began reporting payment data to credit reference agencies from 2023, with both on-time and missed payments potentially appearing. Successful complaints can sometimes have adverse markers corrected.
Related guides
- BNPL and the new FCA rules from July 2026
- Types of unaffordable credit
- The CONC rules on affordability
- How the Financial Ombudsman handles unaffordable lending complaints
- Do I have an unaffordable lending claim?
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