Laybuy Administration and Unaffordable Lending Complaints
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.
Laybuy was a New Zealand-based Buy Now Pay Later operator that became one of the major UK BNPL brands after launching in the UK in 2019. It collapsed in June 2024 and went into administration, with its UK customer base subsequently sold to Klarna in August 2024. As an unregulated BNPL operator that has now ceased trading, the complaint route for historic Laybuy lending is very limited. This page sets out what happened, what it means for customers, and where the situation stands.
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What happened to Laybuy
On 24 June 2024, Laybuy entered administration with FTI Consulting LLP appointed as joint administrators. The collapse was attributed to “a longer-than-expected economic downturn, reduced consumer spending, higher credit losses, and increased fraudulent activity” between December 2023 and February 2024. Laybuy had around 300,000 active UK users at the time of collapse and partnerships with approximately 2,600 UK merchants.
Following the administration:
- Laybuy stopped accepting new transactions and disabled new account sign-ups.
- Existing customers continued to be charged for outstanding instalments under their pre-existing agreements.
- In August 2024, the receivers sold Laybuy’s customer base and technology platform to Klarna.
- Laybuy’s parent NZ entities were placed into liquidation, with Grant Thornton appointed liquidators.
Regulatory position
Laybuy operated under the BNPL exemption in the Consumer Credit Act — its Pay in 6 product was interest-free, repayable in six weekly instalments. CONC 5.2A did not apply to its lending. The Financial Ombudsman Service’s compulsory jurisdiction did not cover the BNPL activity.
Because Laybuy is no longer trading and was unregulated for its core BNPL activity, the standard complaint routes are essentially closed.
Where complaints stand
Pre-administration affordability complaints
Direct affordability complaints to Laybuy are no longer practical — the administration is winding up the company, and there is no entity to direct complaints to going forward. Even before the collapse, FOS’s compulsory jurisdiction did not extend to Laybuy’s BNPL activity.
Outstanding balances acquired by Klarna
For customers whose accounts were sold to Klarna in August 2024, the outstanding balances became Klarna’s. Repayment continues on the original terms. Klarna’s own customer service and complaints process applies to the management of those accounts going forward, but the original Laybuy lending decisions remain Laybuy’s.
Refunds and disputes about returned items
For customers who returned items but did not receive expected refunds at the time of administration, the position depends on the merchant. The administrator initially indicated it would assess these case by case. Most refund issues are resolved with the original merchant rather than with Laybuy.
What you can practically do
For customers with Laybuy-related issues:
- If you have an outstanding balance now held by Klarna — repayments continue under the original agreement. Klarna’s customer service handles ongoing administration.
- If you have a refund issue with a merchant — pursue it directly with the merchant. Section 75 protection did not apply to Laybuy purchases.
- If you have an active dispute about the original lending — the administrator was reviewing such disputes case by case in 2024-2025; the position now depends on the wind-up process.
- For credit-file entries — Laybuy reported to Experian. Where late-payment markers were applied, you can raise corrections with Experian directly under the Data Protection Act 2018.
Why the standard complaint route doesn’t work for Laybuy
Three factors combine to make Laybuy complaints particularly difficult:
- BNPL was unregulated at the time of Laybuy’s lending — no CONC framework applied.
- FOS’s compulsory jurisdiction did not cover the BNPL activity.
- Laybuy is in administration with limited funds — even where a complaint were viable, recovery would be a small unsecured creditor claim.
What if the lender has gone into administration?.
Frequently asked questions
Can I claim against Laybuy for unaffordable lending?
The standard CONC and FOS route does not apply. The administrator’s position is the relevant route, and recovery prospects are extremely limited.
My Laybuy debt was sold to Klarna — can I claim against Klarna?
Klarna acquired the loan book and is now responsible for managing the outstanding balances, but the affordability of the original Laybuy lending decision remains Laybuy’s legal responsibility. The transfer doesn’t change the regulatory analysis of the underlying transaction.
Should I keep paying my Laybuy/Klarna balance?
Yes — the original credit agreement remains valid and enforceable. Stopping payments will result in late fees, potential debt collection, and credit-file impact. If you cannot afford the repayments, contact Klarna about hardship support or seek free debt advice from StepChange or Citizens Advice.
Related guides
- What if the lender has gone into administration?
- BNPL and the new FCA rules from July 2026
- Buy Now Pay Later claims hub
- Section 140A and the unfair relationship test
- Do I have an unaffordable lending claim?
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