New Buy Now Pay Later rules introduce affordability checks to prevent overspending

BBC reported that since the summer, Buy Now Pay Later (BNPL) services have been required to perform affordability checks on customers before approving purchases. This change follows the official regulation of BNPL as a form of loan starting in July.

The new rules mean that if a customer fails the affordability test, their BNPL purchase will be blocked. This is the first time such checks have been mandatory, aiming to prevent consumers from taking on debt they cannot repay.

BNPL lenders like Klarna and Clearpay must now have regulator approval to operate, which also offers shoppers better access to refunds and independent complaint rulings if issues arise, according to the BBC.

With the costly festive season approaching, shoppers are advised to slow down purchases and consider whether items are essential to avoid being blocked or having borrowing limits reduced. Sara Williams, a former debt adviser, suggests being cautious about high credit limits and postponing non-essential buys.