The Financial Conduct Authority has confirmed regulatory protections for BNPL borrowers, set to take effect from 15 July 2026.
Following this announcement, the UK's Financial Conduct Authority (FCA) has finalised rules bringing unregulated Buy Now Pay Later (BNPL) agreements under its supervision, with enforcement beginning in mid-2026. The move follows the government's decision to extend regulatory oversight to a sector that has grown from GBP 60 million in 2017 to over GBP 13 billion in 2024.
Under the new framework, BNPL lenders will be required to obtain FCA authorisation and comply with the Consumer Duty. Firms will also need to conduct proportionate affordability assessments before extending credit, ensuring borrowers can meet repayment obligations. In addition, the rules mandate clear disclosure of payment schedules, amounts due, and consequences of missed payments at the point of sale.
Consumer protections and firm requirements
According to the official press release, lenders offering BNPL will be obligated to provide support to customers experiencing financial difficulty, including referrals to free debt advice services where appropriate. Consumers will gain access to the Financial Ombudsman Service for complaints and compensation claims when issues arise.
The regulatory framework applies specifically to deferred payment credit agreements that are currently unregulated. BNPL arrangements already covered by existing credit regulations remain outside the scope of these new rules, as the FCA has also excluded supplier-provided credit from regulation, following a government decision made in 2024.
Alexander Berrai, Deputy CEO at emerchantpay, commented on the announcement: `The FCA’s decision to bring Buy Now, Pay Later under regulation is a necessary step for a sector that has become part of everyday payments. Proportionate affordability checks and clearer consumer information should help ensure BNPL is used responsibly and that consumers are not taking on credit they cannot reasonably repay`.
Moreover, Kristaps Zips, UK CEO at payabl., also commented that `The FCA’s announcement on new protections for Buy Now Pay Later is a welcome step, bringing it within the scope of the Consumer Duty and strengthening protections for consumers` and `It is vital that those operating in the BNPL space, particularly fast-growing fintechs, take the time to make sure they are fully prepared for these changes. Getting this right will not only meet new regulatory expectations, but ensure BNPL continues to develop as a safe, sustainable part of the payments and credit ecosystem.`
The regulator has indicated it will offer pre-application support to firms preparing for authorisation. Businesses and companies can register for the temporary permissions regime between 15 May 2026 and 1 July 2026, with six months from the regime's commencement to submit full authorisation applications. The FCA has stated its intention to support firms developing products in the sector whilst ensuring consumer protection measures are enforced.
Following the announcement, Monica Eaton, Founder & CEO, Chargebacks911, mentioned that `The FCA’s decision to bring Buy Now Pay Later into regulation is a logical next step for a product that has moved from niche to mainstream in just a few years.`, adding that `Businesses offering BNPL at checkout should start preparing now, because what has traditionally been treated as a payments feature will increasingly be viewed through a regulatory and dispute-management lens.`
Tim Ranney, CEO, Congruit Inc., commented that `The FCA’s new rules reinforce what many of us have seen coming — credit decisions can’t rely on static scores alone. When affordability becomes a regulatory requirement, the industry must pay attention to how consumers are managing their financial obligations in real time.`
The regulatory change addresses concerns around repeat usage of BNPL by consumers who may lack the capacity to repay, whilst preserving access to the credit facility for those who can use it to manage cash flow and other financial needs.
Chris Jones, Managing Director at PSE Consulting, commented on the initiative: `The FCA’s announcement to bring BNPL directly within its regulatory sphere is a landmark moment for UK consumer finance. Far from stifling the market, these rules signal that BNPL is here to stay, and consumers can be confident they have the same level of protection afforded by other credit products. By introducing mandatory affordability checks, clear product disclosures, and stronger consumer support, the FCA is ensuring all BNPL actors meet the same high standards as the rest of the market.`
Scott Dawson, CEO of DECTA, also provided insights on the announcement: `The FCA’s emphasis on transparency and affordability in its updated framework for Buy Now, Pay Later (BNPL) is a constructive step for the payments ecosystem. As BNPL matures and becomes embedded in everyday commerce, clear rules that reinforce responsible lending and consumer understanding will be critical to sustaining trust and long-term adoption.`
