Will new rules and regulation make Buy Now Pay Later harder to use?

Will it change how Fair for You and the Iceland Food Club works?

In July 2026, there will be new rules for Buy Now, Pay Later (BNPL) lenders like Klarna, Clearpay, PayPal Pay in 3, and Zilch.

You might have seen a new report entitled Buy Now Pay Later: A Review of the Market, Risks and Trends published on 5 February 2026 by Fair4All Finance. It predicts that these rules will mean BNPLs stop lending to lots of customers.

Here at Fair for You we wanted to explain a bit more about these rules and what they might mean for you later this year. 

What is BNPL?

BNPL or Buy Now, Pay Later is a type of interest-free loan. Being interest free means that as long as you make repayments in time, you will only pay back the amount you borrowed - nothing extra.

BNPL is offered when you’re ready to check out on a retailer’s website - customers are given the choice to split their payment into three or four smaller payments. If you apply for the BNPL loan and are accepted, you’ll make your first payment immediately and then the next one might be two weeks, 30 days, or one month later.

If you miss a payment you might be charged a late fee, or you might be rejected for future loans from that lender, or it might negatively impact your credit score.

BNPL has become very popular in recent years and while it is very useful for lots of people, including low-income households, there are concerns that it encourages people to spend more than they can afford.

Why do the BNPL Rule Changes Matter?

Around 1 in 4 UK adults use BNPL, according to the new Fair4AllFinance research. 

This also says it is “widely agreed” that the new regulations will result in “considerable numbers of customers being declined access” - perhaps around 20% to 30%.

People in lower income households may be at an even higher risk of being declined.

What could the BNPL Rule Changes Mean for You? 

If you use BNPL or Fair for You, you might be wondering what this means for you. The four main things to know are:

1. Fair for You is not a BNPL, so these rules do not directly impact how we lend, or any loans you might already have with us.
2. This report is only a prediction - nobody can be sure exactly what the new rules will mean for an individual. Many customers will continue to be able to use BNPL as normal.

3. Being turned down by a BNPL might lower your credit score, When applying to use a BNPL, it should be made clear whether they will perform a ‘hard’ or ‘soft’ credit check. A ‘hard’ check, when a company makes a complete search of your credit report, does appear on your credit report and could lower your credit score. It's like when you apply for a mortgage or credit card. A ‘soft’ check does not. After regulation, it is possible that BNPLs will perform hard checks more often. 

   Having lots of 'hard' checks on your credit file in a short space of time may make companies think that you're in financial trouble and signals to lenders that you may be higher risk. It could therefore be a reason for being turned down for credit.

Read on to find out more about the new regulation of BNPL, and how Fair for You checks applications.

About the new BNPL laws

The new regulations for BNPLs are expected to start in July this year. These include requiring lenders to check people can afford the loans; reporting more information to credit reference agencies (ie impacting credit scores); and new responsibilities that the lender has to offer the customer, if something goes wrong.

Like many others, Fair for You agrees that it is necessary to introduce new regulations, to stop people getting into problem debt because of BNPL. You can read more about our view on getting this balance right on our LinkedIn page.

However, we also know that BNPL can be a useful tool for lots of Fair for You customers, especially with the high cost of living.

Fair for You provides Flexibility to Buy Your Essentials

Unlike BNPL, Fair for You offers flexibility on loans including when you repay and how long you borrow. You can choose to pay weekly, fortnightly, 4 weekly or monthly for a loan from us - check out our loan calculator for a clear outline of what repayments would look likes. You can also overpay, with no penalties.

Alongside our Shopping Card loan of up to £350, and loans to buy individual household items, we offer the Iceland Food Club loan, which is zero interest.*

How Fair for You looks at Applications

We’ve made this video explaining how we assess affordability - watch it here, or scroll down to read more.

When you apply for a loan, we’re particularly interested in how you’re repaying things right now at the time of your loan application, alongside your credit history. This is why we may be able to consider lending to people with bad credit scores.

To help give you the best chances of being accepted for your loan, we may also ask for you to share your Open Banking data with us. This helps us get the full picture of your financial situation. Our numbers show that sharing this data can actually help improve your chances of being accepted.

Along with these credit checks, in some cases, we may also run identity checks.

For more peace of mind about the financial checks we carry out on our loan applicants, go to this post on our blog.

If you have any other questions about how Fair for You works, visit our FAQs page.

*Fair for You loans are subject to eligibility and affordability checks. Missed payments may affect your credit file.