The Financial Conduct Authority has published proposals to bring unregulated Buy Now Pay Later lending within its regulatory perimeter in 2026, extending protections broadly aligned with other consumer credit. The package would require lenders to assess whether borrowers can afford to repay, provide support for customers in financial difficulty, and ensure access to the Financial Ombudsman Service where disputes arise. The proposals apply to unregulated deferred payment credit, defined as interest-free credit used to finance goods or services and repayable in 12 or fewer instalments within 12 months or less. The FCA indicates it is largely relying on existing requirements, including the Consumer Duty, rather than introducing extensive new rules. A temporary permissions regime would allow firms to continue trading while they move toward full authorisation, with registration opening two months before the regime starts on 15 July 2026 and firms then having six months from that start date to apply for authorisation. Supporting analysis cited by the FCA shows 20% of UK adults (10.9 million) used unregulated BNPL at least once in the 12 months to May 2024, with 17% of users (1.9 million) using it frequently (10 or more times); in May 2024, 2% of UK adults (1.1 million) had GBP 500 or more outstanding unregulated BNPL debt. Feedback is sought from BNPL lenders, consumer groups and other stakeholders, with the consultation open until 26 September 2025.

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