Unregulated Buy Now, Pay Later (BNPL) agreements will fall under full regulation by the Financial Conduct Authority(FCA) from 15 July 2026. For the first time, BNPL lenders will be required to meet the same standards as other consumer credit providers. With almost 11 million UK adults using BNPL in 2024, according to an FCA survey, this represents a significant regulatory shift.

The reforms are designed to introduce clearer protections for individuals who rely on BNPL regularly and who may be at risk of taking on commitments they cannot afford to repay.

What Protections Are Being Introduced?

Once the rules come into force, BNPL firms will need to comply with the FCA’s Consumer Duty. This will include the following measures:

  • Clearer information – Customers must receive clear, upfront information about what they are agreeing to, including repayment dates, amounts due, and what will happen if a payment is missed.

  • Affordability checks – Lenders will be required to assess whether a customer can afford the borrowing before offering BNPL.

  • Support where needed – Firms must provide appropriate support to customers experiencing financial difficulty and, where suitable, signpost them to free debt advice services.

  • Complaints and compensation – Customers will have the right to refer complaints to the Financial Ombudsman Service.

Why BNPL Is Coming Under Regulation

BNPL has expanded rapidly in recent years, increasing from £0.06bn in 2017 to more than £13bn in 2024.

For many consumers, BNPL offers short-term flexibility and can assist with managing cash flow. However, in the absence of affordability checks, concerns have been raised that some individuals may be taking on more debt than they realise.

Timescales

BNPL providers will need to obtain full FCA authorisation. A temporary permissions regime will open from 15 May to 1 July 2026, allowing providers to register while preparing their full application. Once the new regime begins, providers will have six months to secure full authorisation.

What This Means for Businesses

If you use a third-party BNPL provider, you may notice changes in how customers are onboarded as new affordability checks are introduced.

Your BNPL provider is likely to communicate the necessary adjustments in advance. However, as any failure on their part could reflect negatively on your business, it would be prudent to remain aware of the changes and seek reassurance that your provider will comply fully with the new regulatory requirements.

 

See: https://www.fca.org.uk/news/press-releases/new-protections-confirmed-buy-now-pay-later-borrowers