The BNPL market has grown significantly in recent years, from £0.06 billion in 2017 to over £13 billion in 2024. According to the FCA's 2024 Financial Lives Survey, 20% of UK consumers (10.9 million adults) used it in the 12 months leading up to May 2024. It refers to interest-free instalment credit that allows borrowers to split the cost of purchases into 12 or fewer regular repayments within a 12-month period.
It's clear that BNPL provides an important source of credit for many, but there are no protections in place currently for those who use it repeatedly and may not be able to afford it. With this in mind, the UK government decided to bring the sector under the FCA's regulation from 15 July 2026. The aim of the new regime is to help consumers navigate their financial lives, with appropriate support for consumers. The FCA has now published the final details of its regulatory regime for what will be called deferred payment credit or DPC. Suppliers that provide their own credit will remain exempt from regulation, as will brokers, but the government will continue to monitor these other areas of BNPL.
Conduct standards
The FCA is applying most of its existing conduct rules and guidance in the Consumer Credit
Sourcebook (CONC) to DPC. It is also making new rules for DPC lenders to provide product information to a borrower before they enter a DPC agreement. In addition, it is making new guidance to remind firms of their obligations under the Consumer Duty's consumer understanding and consumer support outcomes. The FCA is creating new rules requiring firms to provide information to DPC borrowers who have missed a repayment, and to give notice to the customer before taking certain action. It will require DPC lenders to provide information about free debt advice in certain circumstances. It has clarified what information firms should provide to consumers who have missed payments. Finally, it is applying existing creditworthiness rules to DPC lending, including to agreements of less than £50.
Application of the wider Handbook
The FCA is also applying key Handbook requirements beyond CONC to DPC lenders. Existing regulatory reporting requirements to DPC lenders, including Product Sales Data (PSD) and aggregate regulatory returns, with transitional provisions for when firms will need to submit PSD returns.
Dispute resolution
The FCA is also applying its Dispute Resolution: Complaints Sourcebook (DISP) rules on complaint handling to DPC and expanding the Compulsory Jurisdiction of the Financial Ombudsman to DPC activities. However, it won't be expanding the Financial Ombudsman's Voluntary Jurisdiction to cover DPC activities by a respondent from a European Economic Area (EEA) or Gibraltar establishment. It is suspending its complaints reporting rules for complaints arising from DPC activities for firms while in the Temporary Permissions Regime (TPR). Finally, it has confirmed that it is not extending compensation through the Financial Services Compensation Scheme (FSCS) to DPC activities, in line with most other consumer credit activities.
Authorisation
Lenders will need to be authorised by the FCA to provide BNPL. The FCA will provide pre-application support to these firms to help them get ready. Firms will be able to register for the TPR between 15 May 2026 and 1 July 2026. To do this you will have been carrying on BNPL activity (which will become a regulated activity on regulation day) on 15 July 2025, have notified the FCA before regulation day, and have paid the relevant registration fee. Firms will have six months from the date the regime comes into force to apply for full authorisation.
Any firm that does not currently hold the necessary consumer credit permissions and does not register for the TPR will not be permitted to enter into new DPC agreements after regulation starts. It will be a criminal offence to enter into such agreements without permission after 15 July. However, any firm will continue to be able to service DPC agreements taken out before regulation starts, as these agreements will remain unregulated.
