UK FCA consults on BNPL rules for 15 July 2026

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/23, alongside a press release and new webpage, setting out its proposed rules for regulating Deferred Payment Credit (DPC), commonly known as Buy Now Pay Later (BNPL). In the paper, the FCA uses "DPC" to refer specifically to the interest-free, short-term credit products. The deadline for comments on the FCA's consultation is 26 September, with a final policy statement expected in early 2026. The rules will apply from 15 July 2026.

The Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025 brings interest-free BNPL agreements within the regulatory perimeter. This means that from 15 July 2026, third-party lenders offering DPC must be FCA-authorised or hold temporary permission under the temporary permissions regime (TPR). The TPR allows firms to continue operating while the FCA assesses their applications. Firms without authorisation or temporary permission must cease regulated DPC activity but may continue servicing DPC agreements entered into before that date. Merchants offering DPC directly will remain outside the regulatory perimeter and will not require authorisation.

The FCA's proposals seek to minimise regulatory burden by relying, where possible, on the consumer duty rather than introducing new rules. Initially, the legislation intended to regulate domestic premises suppliers (e.g., in-home sales businesses) brokering DPC as credit brokers. However, the government now plans to exempt these businesses via amending legislation, expected to align with the DPC regulation timeline. The FCA is consulting on the basis that all broking of DPC agreements will remain exempt.

The FCA's proposals cover:

• Information requirements, aimed at ensuring consumers receive clear, timely and relevant information to support informed DPC borrowing decisions, before they enter a credit agreement and throughout the term of the agreement.
• Creditworthiness assessments, where the FCA proposes applying existing FCA rules that require proportionate assessments to ensure DPC lending is affordable.
• Application of high-level standards, where the FCA clarifies how the consumer duty and other existing rules for credit consumer firms will apply to DPC.
• Dispute resolution requirements, where the FCA sets out how firms would need to meet its complaints handling and how consumers could access the Financial Ombudsman Service to escalate complaints.
• Data reporting requirements, to improve the FCA's oversight of the DPC sector through better, up-to-date data while minimising the burden of bespoke data requests.

You may like to read our article on the FCA's proposals, "The continuing journey towards buy now, pay later regulation". Alongside the consultation, the FCA has published Occasional Paper No.69, which explores the potential harms of BNPL credit, particularly on consumer indebtedness and arrears.

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