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Buy now, pay later (BNPL) users are set to gain new protections under proposals published today by the UK’s Financial Conduct Authority (FCA), which has set a compliance deadline of July 2026.
The aim to bring BNPL, officially known as deferred payment credit (DPC), into line with other consumer credit products.
BNPL typically refers to interest-free loans repayable in 12 or fewer instalments, and its use has grown rapidly, rising from £60m in 2017 to more than £13bn in 2024.
According to the FCA’s latest , 20 percent of UK adults, around 10.9m people, used BNPL in the year to May 2024.
“We have long called for BNPL products to be brought into our remit, so people can benefit from BNPL while being protected,” said Sarah Pritchard, deputy chief executive at the FCA.
Pritchard added that the regulator is “mainly relying on existing requirements, including the Consumer Duty, rather than proposing to make lots of new rules, supporting growth and allowing firms to innovate.”
“Our regulation will help consumers navigate their financial lives, with checks on whether they can afford to repay, support when things go wrong and access to the right information to make informed decisions.”
Key proposals
The proposals follow legislation passed by the government on July 14 that will bring DPC lending under the FCA’s remit.
From July 15, 2026, third-party BNPL lenders will need to be authorised by the FCA or operate under a temporary permissions regime while their applications are assessed.
Merchants that offer their own credit directly will remain outside the regulatory perimeter.
The FCA, which is seeking feedback until September 26, 2025, says that it intends to introduce a proportionate regulatory regime for BNPL lending that supports innovation while ensuring fair treatment for consumers.
As part of this, it plans to lean heavily on its existing Consumer Duty framework to drive better outcomes.
“Once regulation comes into effect, we propose that firms undertaking DPC activity will need to deliver against their obligations under the Duty,” the report says. “The Duty requires firms to act to deliver good customer outcomes.”
“As part of this, firms should consider the needs of their customers, including those with characteristics of vulnerability, and how they behave, at every stage of the customer journey.”
Other proposals include affordability checks, clearer consumer information, access to dispute resolution via the Financial Ombudsman Service, and new obligations for firms to support customers in financial difficulty.
BNPL providers will also be required to report data to help the FCA monitor the market effectively.
Although some BNPL firms are already regulated for other credit activities, many operate outside the FCA’s current remit.
To prevent disruption when regulation comes into force in July 2026, the FCA is urging firms to start preparing now and apply for temporary permissions.
