The United Kingdom is preparing to introduce sweeping new regulations for Buy-Now-Pay-Later (BNPL) providers, with rules set to take effect on July 15, 2026. The Financial Conduct Authority (FCA), the country’s financial watchdog, announced these measures on July 18, 2025, aiming to bring BNPL products under the same regulatory umbrella as other forms of credit.
BNPL services have surged in popularity in recent years, offering consumers the ability to purchase goods and pay for them in installments without immediate interest charges. However, the lack of regulation has raised concerns about consumer protection, especially for younger and more vulnerable borrowers. The FCA’s new rules are designed to address these issues head-on by imposing enhanced affordability checks and requiring lenders to provide financial support to borrowers who may struggle to repay their debts.
Sarah Pritchard, deputy chief executive at the FCA, emphasized the importance of these protections in a press release: “We have long called for BNPL products to be brought into our remit, so people can benefit from BNPL while being protected.” She added, “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.”
Under the new framework, BNPL lenders will be obligated to verify that borrowers can afford their repayments before approving credit. This affordability assessment is a significant shift from current practices, where such checks are often minimal or absent. Additionally, if a borrower encounters financial difficulties, lenders must offer appropriate support to help manage repayment challenges.
For the first time, BNPL customers will also have the right to escalate complaints to the Financial Ombudsman Service, a move that aligns these products with other regulated lending services. This change is expected to provide greater consumer confidence and recourse in disputes.
The FCA’s proposals have opened a consultation period running until September 26, 2025, inviting feedback from BNPL providers, consumer advocacy groups, and other stakeholders. After reviewing the input, the regulator plans to finalize the rules in early 2026 before implementing them mid-year. This timeline allows firms ample time to adjust their operations to meet the new standards.
Industry experts have weighed in on the potential impact of these regulations. Hyder Jumabhoy, a partner at White & Case and Global Co-head of the firm’s Financial Institutions Industry Group, highlighted the medium-term consequences for the consumer finance sector. Speaking to Bloomberg, he noted that “the new regulations will likely accelerate consolidation and M&A activity within the consumer finance vertical,” as smaller BNPL providers may find it challenging to comply with the stricter requirements.
Jumabhoy also commented to CityAM on the broader implications for UK lenders, pointing out that the regulatory changes, effective July 2026, will reshape competitive dynamics in the market. “Lenders will need to adapt quickly to the intensified oversight, which could drive innovation but also pressure margins,” he said.
The FCA’s latest research sheds light on why these measures are necessary. An occasional paper released alongside the announcement revealed that unregulated BNPL, also known as deferred payment credit (DPC), tends to be used disproportionately by younger consumers who often have lower creditworthiness and higher levels of unsecured debt. The FCA stated, “These findings show DPC users are more vulnerable than the wider U.K. population. As DPC is currently unregulated, they may need additional protections and support.”
Consumer groups have welcomed the FCA’s initiative. Fair By Design, a UK organization dedicated to eliminating the “poverty premium,” expressed support on social media. Their message read, “Great to see [the FCA’s] consultation on BNPL out today. We welcome the intention to ensure that consumers are given information that equips them to understand their rights and protections.” This endorsement underscores the demand for clearer safeguards in the rapidly expanding BNPL market.
The FCA’s move reflects a broader global trend of tightening oversight on BNPL services. As these products grow in usage, regulators worldwide are grappling with how to balance consumer access to flexible credit with the need to prevent over-indebtedness and financial harm.
For UK consumers, the introduction of these regulations promises a more transparent and secure BNPL experience. The mandated affordability checks will help prevent borrowers from taking on debt they cannot manage, while the requirement for lenders to offer support and the ability to escalate complaints will provide vital safety nets.
From an industry perspective, the upcoming regulatory regime represents both a challenge and an opportunity. While compliance costs and operational changes may strain smaller providers, the increased trust and legitimacy conferred by regulation could attract a broader customer base and foster sustainable growth.
As the July 2026 deadline approaches, BNPL providers will need to carefully evaluate their business models and risk management frameworks. Stakeholders across the financial ecosystem will be watching closely to see how these changes reshape the UK’s consumer finance landscape.
In sum, the FCA’s announcement marks a pivotal moment for Buy-Now-Pay-Later services in the United Kingdom. By bringing these popular yet previously unregulated products under formal oversight, the regulator aims to protect vulnerable consumers, promote responsible lending, and ensure that BNPL remains a viable and safe option for shoppers nationwide.