BUY NOW, PAY LATER REGULATION: WHAT THE NEW FCA RULES MEAN FOR FIRMS.
From 15 July 2026, Buy Now, Pay Later (BNPL) products are officially regulated by the Financial Conduct Authority (FCA), marking a significant milestone in the UK’s consumer credit landscape.
For years, BNPL has provided consumers with a convenient way to spread the cost of purchases through providers such as Klarna, PayPal and Clearpay. However, the rapid growth of the sector has also highlighted gaps in consumer protection and regulatory oversight. The introduction of FCA regulation addresses these concerns by bringing BNPL products into line with other forms of regulated credit.
WHAT HAS CHANGED?
The new regulatory framework introduces several important requirements for BNPL providers, including:
- FCA authorisation and supervision for firms offering regulated BNPL products.
- Mandatory affordability assessments before credit is granted, helping ensure customers are not offered borrowing they cannot reasonably afford to repay.
- Enhanced consumer protections, including clearer rights when seeking refunds for faulty or misrepresented goods.
- Improved support for customers experiencing financial difficulty, with an expectation that firms signpost debt advice and provide appropriate forbearance before pursuing collections activity.
These measures are designed to create a more consistent regulatory environment while maintaining a smooth customer journey for responsible borrowers.
WHAT THIS MEANS FOR FIRMS?
The new rules represent more than a regulatory update—they require firms to review their governance, compliance frameworks and operational processes.
Organisations involved in offering, facilitating or partnering with BNPL providers should ensure they have:
- Appropriate FCA permissions or a clear understanding of how the new regime applies to their business.
- Robust affordability assessment processes and supporting documentation.
- Updated customer communications, terms and conditions, and complaints handling procedures.
- Effective policies for identifying and supporting vulnerable customers and those experiencing financial hardship.
- Ongoing monitoring and governance arrangements to demonstrate compliance with FCA expectations.
Failure to meet these obligations could expose firms to regulatory scrutiny, enforcement action and reputational risk.
HOW COMPLIANCE CAN ADD VALUE.
For compliance professionals, this regulatory change presents an opportunity to strengthen governance, improve consumer outcomes and build greater trust with customers.
A proactive compliance review can help organisations identify gaps, implement appropriate controls and ensure their BNPL arrangements align with the FCA’s expectations. As the regulatory landscape continues to evolve, firms that invest in strong compliance frameworks will be better positioned to manage risk while delivering fair and transparent customer experiences.
If your business is impacted by the new BNPL regime, now is the time to assess your readiness and ensure your policies, procedures and customer journey remain fully compliant.
HOW COSEGIC CAN HELP?
At Cosegic, we help firms turn regulatory change into practical action. From compliance health checks and gap assessments to FCA authorisation support, policy reviews and specialist advice, our team helps businesses understand their obligations, strengthen their controls and deliver better customer outcomes. If you’re assessing your readiness for the new BNPL regime or want to understand how the FCA’s expectations may impact your business, get in touch; we’ll help you navigate the change with confidence.
