BNPL providers will come under the supervision of the Financial Conduct Authority from 15 July 2026, after the Government confirmed the sector will be formally regulated.
The move brings millions of borrowers into a framework designed to improve transparency, affordability and consumer support.
From next summer, BNPL products will fall within the scope of the Consumer Duty, meaning firms must demonstrate they are delivering good outcomes for customers. The change will affect around 11 million people who use BNPL services across the UK, many of whom rely on the short-term credit option for everyday purchases.
Under the new regime, lenders will be required to provide clear, upfront information about agreements. Customers must be told when payments are due, how much they owe and what the consequences will be if they miss a repayment. The regulator said the aim is to ensure consumers fully understand the commitments they are taking on before entering into an arrangement.
Affordability checks will also become mandatory. BNPL providers will need to carry out proportionate assessments to determine whether a borrower can reasonably repay what they owe. The measure is intended to prevent customers from being extended credit they cannot afford, particularly those who use BNPL repeatedly across multiple retailers.
Firms will also be required to offer support to customers experiencing financial difficulty. Where appropriate, borrowers must be directed to free debt advice services. In addition, consumers will gain access to formal redress mechanisms. If disputes arise, they will be able to escalate complaints to the Financial Ombudsman Service, bringing BNPL into line with other regulated credit products.
BNPL has grown rapidly in recent years, becoming a mainstream payment option at online checkouts and in-store tills. However, until now, it has operated without the same level of regulatory oversight applied to other forms of consumer credit. Officials have raised concerns that some users may accumulate multiple agreements without fully understanding the risks, potentially leading to financial strain.
Sarah Pritchard, deputy chief executive at the Financial Conduct Authority, said: “We want the Buy Now Pay Later sector to thrive – it provides an important source of credit to many – and we will continue to support firms who want to develop innovative new products. But crucially, no one should be lent to if they’re unable to repay, because that could worsen their financial situation. Now Parliament has given us the powers, we’re putting in place proportionate protections for the 11 million people who use it.”
All BNPL lenders will need to seek authorisation from the regulator in order to continue operating in the UK market. The FCA said it will offer pre-application support to help firms prepare for the new requirements, signalling that while innovation remains welcome, compliance will now be central to the sector’s future.
The Government said the reforms are designed to ensure consumers can navigate their financial lives with appropriate safeguards, while allowing responsible BNPL providers to continue serving customers under clearer and more consistent standards.
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