UK Government advances BNPL Regulation

HM Treasury (HMT) has published a response to its 2024 consultation on regulating Buy-Now, Pay-Later (BNPL) products and laid the draft secondary legislation (Financial Services and Markets Act 2000 (Regulated Activities etc) (Amendment) Order 2025), to implement the proposed regime before Parliament. The consultation response is accompanied by an updated webpage and press release. The proposed regulatory framework aims to bring BNPL products under the UK Financial Conduct Authority's (FCA) oversight, ensuring consumers receive clear information, undergo affordability checks, have access to the Financial Ombudsman Service and benefit from the protections of section 75 of the Consumer Credit Act (CCA)—which imposes liability upon a creditor for breaches by a supplier—should something go wrong with their purchases.

The feedback to the consultation was largely positive with respondents expressing a strong desire for action in this area. The government has proposed to implement the rules largely as consulted on and will aim to introduce BNPL regulation as soon as possible. Once the statutory instrument is made, the FCA will have 12 months to consult on and finalise its rules, with BNPL products expected to enter into regulation by mid-2026. The FCA will soon publish a consultation outlining its proposed rules and timelines. This move is part of a broader effort to modernise the UK's CCA framework, with a separate consultation on reforms to CCA  that has also been published. You may also like to read our client bulletin, Buy-Now, Pay Later – The Journey Continues (and the end is nearly in sight) for further detail on HMT's consultation response regarding regulating BNPL products.

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