The UK's Financial Conduct Authority has diluted proposed consumer protection rules for 'buy now, pay later' lenders, scaling back regulations originally set to take effect in July. The FCA's decision to water down the rules has sparked criticism from consumer advocates who argue the changes will leave borrowers vulnerable to predatory lending practices.

The original proposals aimed to boost consumer confidence in BNPL services by requiring lenders to conduct affordability checks and provide clearer terms. Industry analysts suggest the FCA's retreat reflects intense lobbying from major BNPL providers who argued stricter oversight would stifle innovation and limit access to credit for millions of consumers.

Consumer groups warn the weakened regulations fail to address the growing risks associated with BNPL borrowing, particularly as economic pressures mount. The FCA maintains the revised rules still provide adequate safeguards while balancing the need for a competitive market. However, critics argue the regulator has prioritized industry interests over consumer protection in a sector that has seen explosive growth during the pandemic.