Buy now pay later became a regulated activity on 15 July 2026. The FCA calls it deferred payment credit — interest-free credit financing a purchase, repayable in 12 or fewer instalments within 12 months or less. Providers now need permission, borrowers get affordability checks, section 75 rights and access to the Financial Ombudsman. Merchants, after a late reversal, stay outside regulation.
What changed, and when
Regulation Day was 15 July 2026. Before it, DPC sat outside the regime through the exemption in article 60F(2) of the Regulated Activities Order — which applied where the agreement was a borrower-lender-supplier agreement for fixed-sum credit, the number of payments was not more than twelve, those payments fell due within 12 months or less of the agreement date, and the credit was interest-free and free of other charges.
Two statutory instruments did the work. SI 2025/859, made 14 July 2025, amended article 60F so that qualifying agreements cease to be exempt and become "regulated deferred payment credit agreements", and established a temporary permissions regime. Then SI 2025/1154, made 3 November 2025, made a significant change in the other direction — see merchants below.
The final rules are in PS26/1, published February 2026 following consultation CP25/23.
Why it was brought in
The FCA's own figures explain the scale. The DPC market grew from £0.06bn in 2017 to over £13bn in 2024, and its 2024 Financial Lives Survey found that 20% of UK adults — 10.9 million people — had used DPC in the twelve months to May 2024. A product used by a fifth of the adult population with no affordability requirement and no ombudsman access was always going to be brought inside the perimeter.
What providers now have to do
- Creditworthiness assessments under the existing CONC 5.2A rules — and these apply even to agreements of less than £50, which removes the small-transaction carve-out providers had assumed;
- Pre-contract key product information under a new CONC 16, replacing the Consumer Credit Act information requirements with an FCA regime;
- Arrears communications — information to borrowers who have missed a repayment, notice before certain action, and signposting to free debt advice rather than moving straight to collection;
- Complaints handling under DISP, with the Financial Ombudsman's Compulsory Jurisdiction extended to DPC;
- Regulatory reporting, including Product Sales Data and aggregate returns;
- The Consumer Duty, which the FCA describes as a core part of its approach — particularly the consumer understanding and consumer support outcomes.
Section 75 of the Consumer Credit Act applies, and the new disclosure rules require an explanation of the protections it gives — so a consumer with a faulty purchase financed by DPC now has a claim against the lender as well as the retailer.
What is not covered
Two limits worth knowing. FSCS protection is not extended to DPC activities, in line with most other consumer credit activities. And the Ombudsman's Voluntary Jurisdiction is not extended to DPC provided by EEA or Gibraltar establishments.
Complaints reporting is also phased: the rules are suspended for DPC complaints while a firm is in the temporary regime, with new complaints reporting applying from 1 January 2027.
The temporary permissions regime
Firms without the necessary consumer credit permissions could register for a temporary regime. The notification window opened 15 May 2026 — two months before Regulation Day — and closed two weeks before it. Registration has now closed, and the FCA lists 15 firms registered and permitted to continue providing DPC.
Firms in the regime must comply with FCA rules from Regulation Day, with a small number disapplied during transition, and must apply for full authorisation before the end of a six-month window running from 15 July 2026.
For anyone who missed it, the position is stark. A firm without the necessary permissions that did not register cannot enter new DPC agreements after Regulation Day, and it is a criminal offence to do so without permission. Agreements entered before Regulation Day remain unregulated and can continue to be serviced.
Merchants: the reversal
This is the part that changed late and that a lot of commentary has not caught up with.
The original concern was that retailers introducing customers to a BNPL provider were carrying on credit broking, and that domestic premises suppliers — businesses selling in the customer's home — would be regulated. SI 2025/1154 settled it the other way: all credit broking activities carried on in relation to a regulated DPC agreement are excluded from article 36A, so all merchants who broker DPC, including domestic premises suppliers, remain exempt.
That is a material simplification for retail. A shop offering BNPL at checkout does not need permission for doing so. What it does still need is to be careful about what it says — financial promotions rules reach the way credit is presented, even where the broking activity itself is exempt.
What businesses should do now
If you provide DPC and are in the temporary regime, the authorisation application is the immediate deadline, and the affordability and arrears rules are live now rather than on authorisation. The £50 point catches a lot of low-value propositions.
If you accept DPC at checkout, nothing needs permission — but review the customer journey and the promotional wording, and check where liability for a faulty-goods claim now sits between you and the provider under section 75.
And if you are a consumer-facing business budgeting for this, note the shape of the cost: it is not the permission that is expensive, it is the affordability infrastructure, the complaints function and the reporting. Our guides to credit control and FCA redress work cover adjacent territory.
Acumon supports consumer credit firms on regulatory reporting, controls and the finance function through financial services audit, corporate governance and internal audit work. If you registered for the temporary regime, the authorisation application and the reporting build are the two workstreams that cannot slip.