Buy Now, Pay Later (BNPL) has transformed the way consumers shop. From clothing and electronics to travel and home improvements, BNPL allows customers to spread the cost of purchases over several instalments, often interest-free. Its convenience has made it one of the fastest-growing forms of consumer credit in the UK.
However, as its popularity has increased, so too have concerns about consumer protection. Until now, many BNPL products have operated outside the UK’s mainstream consumer credit regulatory framework. That is about to change.
From 15 July 2026, the Financial Conduct Authority (FCA) will begin regulating many third-party BNPL products (referred to in legislation as Deferred Payment Credit (DPC)), introducing stronger protections for consumers while maintaining access to flexible credit.
What is Buy Now, Pay Later?
Buy Now, Pay Later is a type of short-term credit that allows consumers to purchase goods or services immediately and pay for them over time through a series of instalments.
Many BNPL products offer interest-free repayments, provided payments are made on time. Providers commonly integrate their services directly into online checkout processes, making access to credit quick and straightforward.
While BNPL can be a useful budgeting tool, it remains a form of borrowing and carries risks if consumers take on more debt than they can comfortably afford.
Why is the FCA Regulating BNPL?
According to the FCA, more than 11 million UK consumers use BNPL. The market has expanded rapidly over recent years, prompting concerns that consumers have not always received the same protections available for other forms of credit.
The FCA believes regulation is necessary because:
- BNPL has become a mainstream method of borrowing;
- Consumers may not fully understand the risks associated with delayed payments;
- Existing protections have not always been consistent across providers;
- Stronger rules can improve confidence in the market while supporting responsible innovation;
What Changes from 15 July 2026?
The new regulatory regime introduces several important protections.
- Affordability checks
BNPL providers will be required to carry out proportionate creditworthiness and affordability assessments before offering credit. These checks are intended to reduce the risk of consumers borrowing more than they can realistically repay. This reflects the FCA’s requirements under CONC 5.2A (Creditworthiness Assessment).
- Clearer information
Consumers must receive clear and understandable information before entering into a BNPL agreement, including:
- repayment schedules;
- the consequences of missed payments;
- any applicable fees or charges; and
- the key terms of the credit agreement.
This aligns with the FCA’s broader expectation that communications are clear, fair and not misleading (Principle 12 and Consumer Duty, supported by PRIN 2A).
- Access to the Financial Ombudsman Service
If something goes wrong, consumers will be able to refer eligible complaints to the Financial Ombudsman Service (FOS), giving them access to an independent dispute resolution process.
- Consumer Duty applies
BNPL firms will be expected to comply with the FCA’s Consumer Duty, requiring them to deliver good outcomes for retail customers throughout the customer journey.
This means firms must consider whether products meet customers’ needs; communications support informed decision-making; customers receive fair value; and appropriate support is available when consumers experience financial difficulty.
- Additionalconsumer protections
Consumers will also benefit from wider consumer credit protections, including rights that were previously unavailable under many BNPL arrangements, helping bring BNPL more closely into line with other regulated credit products.
What Does This Mean for Firms?
Firms offering BNPL products should ensure they are prepared for the new regulatory framework.
Key areas requiring attention include:
- obtaining the appropriate FCA authorisation where required;
- implementing robust affordability assessment processes;
- reviewing customer communications and financial promotions;
- ensuring governance arrangements support Consumer Duty compliance;
- updating complaints handling procedures; and
- reviewing policies, controls and staff training.
For firms already regulated by the FCA, many existing obligations will extend naturally to BNPL activities. For new entrants, regulatory readiness will be essential before offering these products.
What Does This Mean for Consumers?
The new rules are designed to give consumers greater confidence when using BNPL.
Consumers should benefit from:
- better information before taking out credit;
- stronger safeguards against unaffordable borrowing;
- access to independent complaint resolution;
- improved support if they encounter financial difficulties; and
- greater confidence that firms are operating under FCA supervision.
How Complyport Can Help
The new BNPL regime introduces significant regulatory obligations for firms. Complyport can support your business by:
- Assessing whether FCA authorisation or a Variation of Permission is required for BNPL activities;
- Preparing and submitting FCA authorisation applications;
- Conducting Consumer Duty gap analyses;
- Reviewing affordability and creditworthiness assessment processes to ensure they meet FCA expectations;
- Reviewing financial promotions and customer communications;
- Updating compliance policies and procedures;
- Providing ongoing regulatory advice and compliance support.
To discuss how these changes may affect your firm, contact Complyport today to book a meeting with one of our Subject Matter Experts.
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