UK Regulates Buy Now Pay Later Services From July 2026

The Financial Conduct Authority (FCA) announced that buy now, pay later (BNPL) lending, specifically Deferred Payment Credit, will enter its regulatory perimeter on July 15, 2026. Following legislation passed by the UK Treasury and Parliament, BNPL providers must obtain authorization from the regulator and comply with the Consumer Duty, which requires firms to prioritize customer interests.

Key protections include mandatory proportionate affordability checks and the provision of clear, upfront information regarding payment schedules and missed payment consequences. Providers must also offer support and debt advice to customers in financial difficulty. Additionally, the new rules apply Section 75 protection for purchases between £100 and £30,000, making providers jointly liable with retailers for faulty or undelivered goods. Consumers gain the right to escalate complaints to the Financial Ombudsman Service.

Firms may register for a temporary permissions regime between May 15 and July 1, 2026, with six months to apply for full authorization. The measures target a market that exceeded £13 billion in 2024 and is used by approximately 11 million UK adults. While providers like Klarna and Clearpay welcomed the consistent operating environment, some non-profit lenders warned that strict affordability checks could create a credit cliff edge, potentially pushing 30% of users toward unregulated high-cost lenders.