What is Changing?
After years of operating in an unregulated environment, BNPL lenders will now be subject to FCA rules. This means they will need to be authorised by the financial regulator and must comply with the Consumer Duty.
Why is This Happening?
The BNPL market has grown significantly, from £600m in 2017 to over £13bn in 2024. With over 10 million people in the UK using these services, the FCA is introducing new rules to provide better consumer protection and reduce the risk of unmanageable debt, especially for those with low financial resilience.
What Do the New Rules Mean for Consumers?
1. Clearer Information:
Lenders must provide clear, upfront details about the agreement, including payment amounts, due dates, and what happens if you miss a payment.
2. Better Affordability Checks:
Lenders will have to carry out proportionate checks to make sure customers can afford to repay what they borrow.
3. Support for Financial Difficulty:
Lenders must offer support to customers in financial difficulty and, where appropriate, direct them to free debt advice.
4. Right to Complain:
BNPL customers will now have the right to complain and claim compensation through the Financial Ombudsman Service.
What Do the New Rules Mean for Businesses Offering BNPL?
• FCA Authorisation:
Firms offering BNPL products will need to be authorised by the FCA. They can register for a temporary permissions regime between 15 May and 1 July 2026.
• Consumer Duty Compliance:
Businesses must ensure they are compliant with the Consumer Duty, which requires them to act in good faith and deliver good outcomes for retail customers.
• System and Process Updates:
Firms will need to implement new systems and processes to meet the new regulatory framework, including affordability checks and clear customer communications.
What is Not Covered?
The new rules only apply to unregulated Buy Now Pay Later agreements. They do not cover ‘merchant own credit’ where suppliers provide their own credit directly to customers.
This guide is for information purposes only and was last updated in March 2026. For the most current information, always check the official FCA and GOV.UK websites.