BNPL Providers Including Klarna and Clearpay to Face FCA Rules on Credit Checks and Complaints From 15 July

Buy Now Pay Later providers including Klarna and Clearpay will come under direct oversight by the Financial Conduct Authority starting 15 July. The new measures require firms to conduct affordability checks before extending credit and to offer dedicated support to customers facing financial difficulties.

Consumers will also gain the right to escalate unresolved complaints to the Financial Ombudsman Service.

Jonathan Chesterman, debt advice policy manager at StepChange, said shoppers previously had to file a court case under contract law if a provider did not resolve a complaint. The rules introduce clearer information at signup about repayment commitments and the consequences of missed payments.

Chesterman noted that lenders must now perform some form of assessment, whether a simple warning or a fuller review of income and outgoings.

BNPL agreements entered before 15 July remain outside the new framework and continue under the prior unregulated regime. Chesterman advised customers with existing plans to review their balances and payment schedules now. If a payment is missed, providers may send a reminder letter or, in more serious cases, record the default on the customer’s credit file.

Such a record can affect future access to credit including mortgages and car finance. Chesterman said StepChange welcomes the changes because they should reduce the number of shoppers who accumulate unmanageable volumes of BNPL debt. He recommended that anyone struggling seek free advice from StepChange or Citizens Advice rather than paying for debt services.