The Financial Conduct Authority has confirmed that Buy Now, Pay Later lenders will come under full regulatory oversight from 15 July 2026, ending years of debate over the fast-growing but largely unregulated sector. The FCA published its final rules in February 2026, requiring third-party BNPL providers to obtain FCA authorisation and comply with a modified consumer credit framework. It is the most significant expansion of UK consumer credit regulation in a decade.

The rules mandate that BNPL lenders carry out proportionate affordability checks before extending credit, provide clear upfront information about payment due dates, amounts, and consequences of missed payments, and offer support to customers experiencing financial difficulty — including referrals to free debt advice. For the first time, BNPL customers will have access to the Financial Ombudsman Service if things go wrong.

The scale of the market is enormous. BNPL grew from just £60 million in 2017 to over £13 billion in 2024. According to the FCA's 2024 Financial Lives Survey, 20% of UK adults — 10.9 million people — used BNPL in the 12 months leading to May 2024. The regulation applies specifically to "deferred payment credit": interest-free credit repayable in 12 or fewer instalments over 12 months or less, provided by third-party lenders through merchants.

Firms will be able to register for a temporary permissions regime between 15 May and 1 July 2026, and then have six months from the enforcement date to apply for full authorisation. Major BNPL providers including Klarna, Clearpay, and Zilch will all need to comply. Merchants who offer their own credit directly remain exempt from the new rules.

Sarah Pritchard, FCA deputy chief executive, stated: "No one should be lent to if they're unable to repay, because that could worsen their financial situation." The regulation is expected to bring greater transparency to a sector that has faced sustained criticism from consumer groups and debt charities over its rapid, unchecked growth.