UK FCA finalises BNPL rules (Deferred Payment Credit)

The UK Financial Conduct Authority (FCA) has published final policy statement PS26/1 setting out its final rules for regulating Deferred Payment Credit (DPC), commonly known as Buy Now Pay Later (BNPL). This follows the July 2025 consultation and the related statutory instrument (Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025) which brings interest-free BNPL agreements offered by a third part lender within the regulatory perimeter. This means that from 15 July ("regulation day"), relevant DPC agreements can only be entered into by firms already holding the relevant FSMA permissions or who have successfully applied under the temporary permissions regime (TPR), which allows firms to continue operating while the FCA assesses their applications. All merchants undertaking credit broking activities in relation to DPC agreements, including domestic premises suppliers, remain exempt from the need to be authorised under the amending legislation (Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) (No. 2) Order 2025).

The FCA confirms it is largely implementing the rules and guidance as consulted on, with only minor amendments to ensure the rules and guidance work as intended. Key areas of change include: (i) key product information; (ii) credit reference agency disclosure; (iii) missed payment communications; (iv) debt advice signposting; and (v) the UK Financial Ombudsman Service voluntary jurisdiction. The FCA also concluded some new rules and guidance were needed to clarify its expectations on the application of the consumer duty to deliver its policy objectives. For more information on the changes, please see our blog post "Buy now, pay later – the final furlong... PS26/1 on the regulation of deferred payment credit published".

Regarding next steps, the FCA states that firms that do not currently hold the necessary consumer credit permissions but intend to continue DPC lending after regulation day must apply to be included in the TPR. The TPR notification window opens on 15 May, two months before regulation day, and closes two weeks before regulation day. Firms may contact the FCA, including via its pre‑application support service (PASS), with any queries.

The FCA warns that firms lacking the appropriate permissions and not registered for the TPR will not be permitted to enter new DPC agreements after regulation day, and doing so will constitute a criminal offence. Firms may, however, continue to service DPC agreements entered into before regulation day, as those agreements will remain unregulated.

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