Unregulated Buy Now Pay Later (BNPL) agreements will come under full Financial Conduct Authority (FCA) regulation from 15 July 2026. For the first time, BNPL lenders will be expected 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 development in the consumer credit market.

The changes are intended to provide clearer protections for individuals who regularly rely on BNPL and who may be at risk of taking on commitments they are unable to repay.

What protections are being introduced?

Once the new rules take effect, BNPL businesses will need to comply with the FCA’s Consumer Duty. This will introduce several changes, including:

• Clearer information – Customers must receive clear, upfront information about what they are agreeing to, including repayment dates, payment amounts 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 a BNPL agreement.
• Support where needed – Lenders must provide appropriate support for customers experiencing financial difficulty and, where relevant, direct them to free debt advice services.
• Complaints and compensation – Customers will be able to escalate complaints to the Financial Ombudsman Service.

Why BNPL is coming under regulation

BNPL usage has grown 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 help with managing cash flow. However, without affordability checks in place, there has been concern that some individuals may take on more borrowing than they realise.

Timescales

BNPL providers will be required to obtain full FCA authorisation.

A temporary permissions regime will open between 15 May and 1 July 2026, allowing providers to register while preparing their full applications. Once the new regime comes into force, providers will have six months to secure full authorisation.

What this means for businesses

Businesses that use a third-party BNPL provider may notice changes in how customers access these services, particularly as affordability checks are introduced.

Your BNPL provider will likely communicate any required changes in advance. However, as any failure to comply could reflect negatively on the businesses offering these payment options, it is worth remaining aware of the new requirements and ensuring your provider is prepared to meet them.