The UK’s Buy Now Pay Later (BNPL) market is entering a new era. From 15 July 2026, FCA will begin regulating Deferred Payment Credit (DPC) products, bringing many BNPL arrangements within the consumer credit regulatory perimeter for the first time.
The new regime strengthens consumer protections through affordability assessments, clearer customer disclosures and enhanced support for borrowers in financial difficulty. It also gives customers access to the Financial Ombudsman Service (FSO). BNPL lenders will need FCA authorisation or operate under a temporary permissions regime while their applications are assessed.
Which firms will be affected?
BNPL providers and lenders will feel the most immediate impact, offering deferred payment products. These firms will need FCA authorisation (or operate under a temporary permissions regime), implement compliant affordability and creditworthiness assessments, and ensure customer communications meet regulatory standards.
However, the impact extends beyond lenders alone.
Retailers, e-commerce businesses, marketplaces and embedded finance providers that promote or integrate BNPL solutions into their customer journeys will also need to understand the new regulatory landscape. While many merchants may benefit from financial promotion exemptions, firms will still need to review how BNPL products are presented to customers and ensure their arrangements with lending partners remain compliant.
Businesses that have built BNPL into their checkout experience should review their operational processes, customer disclosures, complaints handling and governance frameworks. This helps ensure alignment with the FCA’s expectations and Consumer Duty requirements.
While Electronic Money Institutions (EMIs) and Payment Institutions (PIs) are not typically consumer credit firms, many operate within embedded finance ecosystems where payment services, digital wallets and BNPL solutions all intersect.
For firms that offer BNPL directly, partner with third party lenders, or facilitate customer journeys involving deferred payment products, the new rules will require a review of existing business models and regulatory permissions. Firms will need to assess whether any activities could now potentially constitute regulated consumer credit activity, requiring additional FCA permissions, governance enhancements, or changes to operational processes.
The introduction of affordability assessments and Consumer Duty expectations may also create additional compliance obligations across customer onboarding, monitoring, complaints handling and product governance frameworks. Even where the credit activity is outsourced to a regulated lender, EMIs and PIs should ensure their customer journeys, disclosures and oversight arrangements remain compliant.
Why early preparation matters
For many organisations, the challenge will be understanding exactly where they sit within the new regulatory perimeter and what changes are required before implementation.
As BNPL regulation becomes a reality, firms that act early will be best positioned to achieve compliance, maintain customer trust and continue delivering innovative payment solutions in a more regulated environment.
Firms should begin reviewing their customer journeys, third party partnerships, marketing materials, contractual arrangements and governance structures now. Early planning can help avoid regulatory gaps, operational disruption and potential enforcement risks once the regime takes effect.
The role of regulatory consultants
For many firms, the challenge is not simply understanding the rules but determining how they apply to complex operating models. Managing a new regulatory framework can be complex, particularly where multiple parties are involved in the delivery of a BNPL proposition.
If your business offers, promotes or integrates BNPL products, now is the time to assess your readiness for the new FCA regime.
As firms adjust to this new regulatory landscape, EMIs and PIs have an opportunity to strengthen compliance frameworks and enhance customer outcomes. This will help keep their embedded finance strategies sustainable as regulation increases. Firms that begin preparing now will be best positioned to manage the transition smoothly and avoid costly remediation later.
How fscom can help
fscom supports payment institutions, e-money institutions, lenders and embedded finance providers with authorisation applications, affordability and creditworthiness framework reviews and readiness assessments ahead of new consumer credit regulation.
If you would like to assess your BNPL readiness, review your customer journeys and disclosures against Consumer Duty requirements, or understand what FCA authorisation means for your business model, get in touch.
