The FCA has outlined proposals to bring BNPL products under its regulatory remit from 2026, offering borrowers protections similar to those available in other forms of lending.
This move comes in response to the rapid growth of BNPL usage and mounting concerns over potential consumer harm.
A key element of the proposal includes affordability checks to ensure that borrowers are able to repay BNPL loans without falling into financial hardship. In addition, BNPL providers would be required to support customers who find themselves in financial difficulty and to provide clear, accessible information that enables users to make informed borrowing decisions.
The proposed rules also grant BNPL users the right to escalate complaints to the Financial Ombudsman Service if issues arise. These measures align with the FCA’s broader commitment to ensuring that consumers can navigate their financial lives safely and confidently.
FCA deputy chief executive Sarah Pritchard said, “We have long called for BNPL products to be brought into our remit, so people can benefit from BNPL while being protected. Our regulation will help consumers navigate their financial lives, with checks on whether they can afford to repay, support when things go wrong and access to the right information to make informed decisions.
“We’re mainly relying on existing requirements, including the Consumer Duty, rather than proposing to make lots of new rules, supporting growth and allowing firms to innovate.”
BNPL continues to surge in popularity across the UK, according to FCA research. One in five UK adults, or 10.9 million people, used BNPL at least once in the 12 months to May 2024—up from 17% (8.8 million) in 2022. The FCA recognises the benefits of BNPL as a flexible and affordable credit option, but warns that—like all lending—it carries risks of consumer harm if not properly regulated.
To ease the transition, a temporary permissions regime will allow firms to continue operating under FCA rules while they work towards full authorisation. The FCA is now seeking feedback from lenders, consumer advocates, industry stakeholders, and other interested parties. The consultation will remain open until 26 September 2025.
Keep up with all the latest RegTech news here
Copyright © 2025 RegTech Analyst
Copyright © 2018 RegTech Analyst
