This Valentine’s Day, the Financial Conduct Authority (FCA) has delivered some welcome protection for consumers. If you’ve recently visited a dealership and used BNPL services like Klarna, Clearpay, Laybuy, or Openbuy to pay for vehicle add-ons—such as extended warranties, GAP insurance, or similar—you could receive money back.
In fact, the FCA’s action isn’t limited to cars. Whether you used BNPL for ear pods, a sofa, or any other consumer product, the regulator has ensured that consumers are being treated fairly—think of it as a little proverbial Valentine’s rose.
BNPL vs Traditional Car Finance
When buying a car, most people use regulated finance products like:
- Hire Purchase (HP) or Personal Contract Purchase (PCP) – both forms of consumer credit
- Leasing – a form of consumer hire
These products have been regulated by the FCA and its predecessors for years, providing consumers with protections.
BNPL (Buy Now, Pay Later) emerged as a challenger to traditional credit. Its appeal is simple: “I want it now, but I don’t want to pay yet.”
However, BNPL products:
- Avoid FCA regulation because they structure repayment under 12 months
- Offer short-term deferrals (e.g., pay nothing for 3–6 months, then the balance within 9–6 months)
- Often impose hefty late fees if payments are missed
BNPL isn’t practical for large purchases like cars, but it remains popular for smaller items and dealership add-ons such as warranties, paint/tyre protection, and GAP insurance.
You can check to see if a car has outstanding finance using Total Car Check.
The FCA’s Valentine’s Day Gift
Although the FCA currently cannot fully regulate BNPL, former director Chris Woolard recommended that the Government and FCA introduce regulation for these products.
In the meantime, the FCA has:
- Used the Consumer Rights Act 2015 to review BNPL agreements
- Found that many BNPL terms lack clarity, causing customers to incur unexpected late fees
- Prompted major BNPL providers to voluntarily reimburse affected customers
What this means for you:
- Check your BNPL agreements, whether in your inbox or tucked away
- If you’ve been charged a late payment fee, you may be entitled to a refund
For more information, see the FCA’s guidance on BNPL. Also see our complete guide to outstanding finance on a car.