Question to the HM Treasury:

To ask His Majesty's Government what assessment they have made of the risks associated with the expansion of buy-now-pay-later lending through digital wallets and online marketplaces; and how the new regulatory framework will ensure effective affordability checks and consumer protection.

The Government is aware that Buy‑Now, Pay‑Later (BNPL) products have become a standard feature of digital wallets and online marketplaces, allowing consumers to defer payment at the point of sale. While these products can be a convenient way to help spread the cost of purchases, the lack of regulation has left some consumers exposed to harm, particularly through unaffordable borrowing.

To address this, in July 2025 Parliament passed legislation to bring BNPL products within Financial Conduct Authority (FCA) regulation. The new rules will take effect this July, with the FCA having confirmed the final regulatory requirements in February.

Under the new regulatory regime, BNPL firms will be required to carry out proportionate but robust affordability assessments before lending, informed by appropriate checks on consumers’ financial circumstances and existing borrowing commitments. Firms will also be required to provide clear, timely and prominent information on repayment terms, the consequences of missed payments, and what rights consumers have, enabling them to make informed decisions. In addition, consumers will gain access to established protections for credit users, including the Financial Ombudsman Service and section 75 rights under the Consumer Credit Act. Together, these measures will support the continued use of BNPL products while ensuring appropriate consumer safeguards are in place.