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Unregulated Buy Now Pay Later (BNPL) agreements will fall under full FCA regulation from 15 July 2026. For the first time, BNPL lenders will need to meet the same expectations as other consumer-credit providers. With almost 11 million UK adults using BNPL in 2024, according to an FCA survey, this is a significant change.

The changes aim to provide clearer protections to individuals who rely on BNPL regularly and may be at risk of taking on commitments they cannot repay.

What Protections Are Being Introduced?

Once the rules take effect, BNPL businesses will have to comply with the FCA’s Consumer Duty. This includes the following changes:

• Clearer information – Customers must be given clear, upfront details of what they are signing up to, including repayment dates, amounts, and what happens if a payment is missed.  
• Affordability checks – Lenders will need to check that a customer can afford the borrowing before they offer BNPL.  
• Support when needed – Lenders will need to offer support to customers who are in financial difficulty and direct them to free debt-advice services, where that is appropriate.  
• Complaints and compensation – Customers will be able to take complaints to the Financial Ombudsman Service.

Why BNPL is Coming Under Regulation

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

For many, BNPL provides short-term flexibility and can help with managing cash-flow. However, without affordability checks, there has been a concern that some may be taking on more debt than they realise.

Timescales

BNPL providers will need to have full FCA authorisation. A temporary permissions regime will open from 15 May to 1 July 2026 so that providers can register while they prepare their full application. Once the new regime begins, six months will be allowed for providers to obtain full authorisation.

What This Means for Businesses

If you use a third party BNPL provider, you may see some adjustments to the way you interact with customers as new affordability checks are introduced.

Your BNPL provider will likely let you know about the needed changes in good time. However, since a failure on their part could reflect negatively on your business, it would be worth staying aware of these changes so that you can check that your provider will comply with the new rules.

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