Context
The FCA has confirmed that it will start regulating “Deferred Payment Credit”, known as Buy Now Pay Later (BNPL), from 15 July 2026.
Key points to note
BNPL provides an important source of credit for many people but there are no protections in place for those who use it frequently or who may struggle to afford it. The FCA’s objective is to ensure borrowers benefit from stronger protections when BNPL regulation comes into effect. BNPL will be subject to the Consumer Duty and customers will benefit from:
- Clear information – there will be clear details about the BNPL agreement setting out payment terms, amounts, and what happens if a payment is missed
- Affordability checks – lenders will be required to carry out proportionate checks to ensure customers can afford to repay what they borrow, before entering into a BNPL agreement
- Support – lenders will be required to offer support to customers who may be in financial difficulty and, if needed, direct them to free debt advice
- Complaints and Compensation – customers will be able to complain to the Financial Ombudsman Service.
Lenders will need to be authorised by the FCA to provide BNPL. Those firms who don’t hold the relevant consumer credit permissions can apply for temporary permission under the DPC temporary permissions regime (TPR). This will allow firms to continue temporarily operating on, and after 15 July 2026, whilst the FCA considers the firm’s application. Firms will be able to register for the temporary permissions regime from 15 May 2026 to 1 July 2026. Firms have six months from the date the regime comes into force (15 July 2026) to apply for full authorisation.
The FCA’s objective is that the new regime reduces the risk of harm to consumers. They have stated that they want BNPL firms to operate to high standards and deliver good outcomes, and they will take a proportionate approach to ensure the BNPL market can innovate and grow sustainably.