HMT updates BNPL policy for domestic premises suppliers

HM Treasury has published a policy paper setting out an update to its final position to its 2024 consultation on regulating Buy-Now, Pay-Later (BNPL) products which led to the laying of the draft secondary legislation, The Financial Services and Markets Act 2000 (Regulated Activities etc) (Amendment) Order 2025. Under the draft regulation, domestic premises suppliers (DPS merchants), which are businesses who sell, offer to sell or agree to sell goods or offer to supply or contract to supply services in people's homes, are required to seek credit broking permissions to offer BNPL products as a payment option. However, in response to industry feedback, the UK Government has concluded that this requirement may have a disproportionate impact for small businesses and will potentially reduce consumer choice. Consequently, an amending negative statutory instrument to coincide with the BNPL regulation, will be laid to remove this requirement, while maintaining key consumer protections. These include: (i) BNPL lenders will be required to conduct affordability and creditworthiness checks before consumers can use the product; (ii) consumers will be able to raise complaints through the Financial Ombudsman Service and access protections under section 75 of the Consumer Credit Act; and (iii) BNPL lenders authorised by the UK Financial Conduct Authority (FCA) will be expected to comply with Consumer Duty rules, including regular monitoring and review of consumer outcomes. BNPL firms will also be expected to exercise greater oversight of the merchants using their services—including DPS merchants. The UK government and the FCA will continue to monitor the BNPL market and will take any action, if required, to prevent consumer harm.

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