The landscape of consumer credit in the United Kingdom has undergone a dramatic transformation over the last five years, driven largely by the meteoric rise of Buy Now, Pay Later (BNPL) services. Brands such as Klarna and Clearpay have become ubiquitous at online checkouts, offering shoppers the tantalising ability to spread the cost of clothing, electronics, and even essential household goods without immediately incurring interest. These deferred payment solutions are incredibly convenient and can be a useful budgeting tool when managed responsibly. For years the sector grew faster than consumer protection law. Since 15 July 2026 third-party BNPL lending has been regulated by the Financial Conduct Authority (FCA), yet many users are still unsure what that means for their rights if a transaction goes awry.
When goods arrive damaged, fail to turn up at all, or a retailer unexpectedly ceases trading, shoppers naturally look for avenues to recoup their funds. For decades, UK consumers have relied on the robust protections offered by credit cards. Since July 2026 much of that safety net also covers regulated BNPL agreements, but it depends on when you took out the agreement and who provided the credit.
The Section 75 Safety Net Explained
To understand BNPL protections, one must first understand the gold standard of UK consumer credit protection: Section 75 of the Consumer Credit Act 1974. This powerful piece of legislation stipulates that when you use a credit card to purchase goods or services costing between £100 and £30,000, your credit card provider is jointly and severally liable with the retailer. In practical terms, this means that if the retailer breaches their contract—perhaps by supplying faulty goods, failing to deliver, or going into administration—you have the legal right to claim a full refund directly from your credit card company.
Section 75 provides immense peace of mind because it allows consumers to bypass an uncooperative or defunct retailer and hold the financial institution accountable. Crucially, this protection applies even if you only use your credit card to pay a fractional deposit (such as a £100 deposit on a £5,000 sofa), provided the total cash price of the single item falls within the specified monetary thresholds. It is a cornerstone of consumer confidence in the UK credit market.
Why BNPL Used to Fall Outside Section 75
Until July 2026, most short-term, interest-free BNPL agreements were exempt from regulation under the Consumer Credit Act. As exempt agreements they did not attract Section 75, so a shopper whose retailer went bust while they were still paying instalments had no statutory claim against the BNPL firm. Shoppers relied on each provider’s own buyer protection policy, which is a voluntary commitment set out in the firm’s terms and conditions and not a legal right, and they could not take a complaint about the lending to the Financial Ombudsman Service.
That older position still matters. Agreements taken out before 15 July 2026 remain unregulated, so the new protections do not apply to them. If you are still repaying an older purchase, your options are the provider’s own dispute process and your ordinary rights against the retailer under the Consumer Rights Act 2015.
What Changed on 15 July 2026
The FCA began regulating this type of lending, which it calls Deferred Payment Credit (DPC), on 15 July 2026. The rules apply where the lender and the retailer are different businesses, which covers the familiar third-party checkout services. Lenders must be authorised by the FCA or be on its temporary permissions register, check that you can afford to repay before you take out an agreement, tell you beforehand how much any late fee will be, and contact you if you miss a repayment. The FCA’s consumer guidance also confirms that Section 75 of the Consumer Credit Act is available on regulated DPC agreements, giving you the same route to a refund from the lender that you would have with a credit card.
What Is Still Not Covered
Two gaps remain. First, interest-free instalment credit provided directly by the retailer itself, and not by a separate lender, is still unregulated. Second, the usual Section 75 conditions apply, including the price thresholds described above, so low-value purchases fall outside it. Before you check out, look at who the lender is and whether the purchase meets the threshold.
How to Complain
If something goes wrong with a regulated agreement, raise it with the retailer and tell the BNPL lender straight away. If the lender does not put things right, make a formal complaint to it. If you are unhappy with its final response, you can take the complaint to the Financial Ombudsman Service, which is free to use and independent of the lender.
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