The FCA has confirmed the Buy Now Pay Later (BNPL) sector will now come under its regulation following a recent Government decision.
This will benefit BNPL borrowers with stronger protections from the 15th July 2026. BNPL firms are urged to register for temporary permissions between 1st May and 1st July 2026, after which they will have six months to apply for a full registration.
Like other FCA-regulated firms, BNPL providers will need to comply with the Consumer Duty to ensure consumers receive clear information about their payment agreements, proportionate affordability checks, support for customers in financial difficulty and the ability to complain to the Financial Ombudsman Service should something go wrong. Suppliers offering their own credit are exempt from regulation under the Government’s 2024 “merchant own credit” decision.
According to the FCA’s 2024 Financial Lives Survey, 20% of UK consumers used BNPL services in the 12 months leading up to May 2024, seeing a market growth from £0.06bn in 2017 to £13bn in 2024.
TCC Group’s CEO Joe Norburn commented: “Buy Now Pay Later (BNPL) borrowing has long been an area of focus for the FCA, and the new regime follows a prolonged period of research and consultation with the industry and regulatory action over unfair contract terms and misleading advertising.”
While some businesses in the sector argue that increased regulation could restrict access to credit for those excluded from mainstream finance, frictionless customer journeys are currently enabling deferred-payment borrowing that can quickly escalate from short-term credit into long-term, unmanageable debt. Usage is particularly high among consumers with low financial resilience, including younger people and those on lower incomes, heightening the risk of financial harm.
Norburn said: “The incoming regulation that relies on the Consumer Duty as part of the FCA’s outcome-based framework, with the customer understanding and customer support outcomes in particular, is set to provide better protection for end customers.”
The increased affordability checks and greater transparency at checkout should reduce the risk of over-indebtedness and increase customer understanding.
“This move by the FCA aligns with wider efforts to ensure customers are making informed and sustainable financial decisions,” Norburn continues, “as well as demonstrating the regulator’s approach to supporting digital customer journeys and ensuring customers, particularly those that may be vulnerable, are supported and protected.”
