The UK Government has now previously confirmed that Deferred Payment Credit (DPC), more commonly known as Buy Now Pay Later (BNPL) is coming under FCA regulation. In simple terms, BNPL products (typically interest-free instalments spread over up to 12 months) are moving from a largely unregulated space into a formal regulatory framework.
The Financial Conduct Authority (FCA) will begin regulating DPC from 15 July 2026, so firms should already be thinking about what this means in practice.
So, what’s actually changing?
At a high level, DPC agreements provided by third-party lenders will become regulated credit agreements. This generally applies where:
- The lender and the retailer aren’t the same entity; and
- There’s a commercial arrangement in place between them
That said, not every DPC arrangement will fall into scope. Some notable exceptions include:
- Financing insurance premiums
- Employee lending arrangements
- Certain social landlord arrangements
- Agreements entered into before 15 July 2026
One important point to flag: broking of DPC agreements will remain exempt from regulation, which may come as a surprise to some firms.
What should firms be doing now?
If you’re currently offering DPC products (or planning to), this is the time to start preparing. From July 2026, firms entering into DPC agreements will need to:
- Be authorised by the FCA for consumer credit activities, or
- Operate under the Temporary Permissions Regime (TPR)
- And, of course, comply with the FCA’s rules
Existing agreements entered into before regulation kicks in will remain unregulated, but firms will still need to manage the operational complexity of running both regulated and unregulated books side by side.
The key takeaway here: don’t leave this too late. Reviewing the FCA’s final policy statement (PS26/1: Regulation of Deferred Payment Credit (unregulated Buy Now Pay Later)) and starting implementation work now will make the transition much smoother.
What about the Temporary Permissions Regime?
For firms that aren’t currently authorised, the TPR offers a useful bridge. It allows you to keep operating after regulation starts while your full application is being assessed.
To qualify, firms need to:
- Have been carrying out DPC activity as at 15 July 2025
- Submit a notification to the FCA
- Pay the £280 fee
Key dates to keep in mind:
- 15 May 2026 – TPR notification window opens
- 1 July 2026 – Deadline to apply
Miss that deadline, and you won’t be able to continue offering new DPC products after regulation day.
What will the FCA expect?
While the detail sits in the rules, the overall direction is clear. The FCA wants to see:
- Clear, timely information so customers can make informed decisions
- Responsible lending, including proper affordability checks
- Support for customers in financial difficulty
There’s also a stronger focus on data and reporting, with firms expected to provide the FCA with better insight into sales and customer outcomes.
Final thoughts and how we can help
From a compliance perspective, this is a significant shift, but not an unexpected one. BNPL has grown rapidly, and regulation is finally catching up. BNPL could potentially lead to customer detriment and that has a direct impact on the FCA’s statutory objectives.
The FCA has been clear that it wants a proportionate regime that still allows the market to grow. But at the same time, expectations around governance, customer outcomes, and oversight are increasing.
For firms, the message is simple: start preparing now. Those that take a proactive approach will be in a much stronger position when regulation goes live in July 2026.
At Cosegic, we combine cutting-edge technology with proactive advice to help our clients create the culture and behaviours that go beyond compliance to performance. If you would like a discussion about how we can help with the authorisation of your firm, you can contact us below.
