The UK’s Financial Conduct Authority has confirmed its final rules on Buy Now, Pay Later regulation. From 15 July, consumers will benefit from strengthened protections, including affordability checks and access to the financial ombudsman.
A number of industry observers have given their reaction and the general consensus is supportive of the FCA plans.

Kristaps Zips, UK CEO, payabl.

The FCA’s announcement on new protections for Buy Now Pay Later is a welcome step, bringing it within the scope of the Consumer Duty and strengthening protections for consumers.

BNPL has exploded in popularity as a payment method in recent years. When used responsibly, it can support business growth while giving consumers greater flexibility to spread the cost of larger purchases, something our research shows remains a key driver of BNPL use.

However, as its usage grows, it is critical that consumers clearly understand these products and the potential consequences of missed payments. While it now plays an important role in the wider credit landscape, that role must be underpinned by robust checks on affordability.

Assessing creditworthiness at speed will be crucial for firms ahead of the new rules coming into force in July. Innovations in predictive analytics and AI can play an important role here, enabling real-time analysis of transaction data to support smarter decisions and approvals, without leading to increased defaults or extra friction at the checkout.

It is vital that those operating in the BNPL space, particularly fast-growing fintechs, take the time to make sure they are fully prepared for these changes. Getting this right will not only meet new regulatory expectations, but ensure BNPL continues to develop as a safe, sustainable part of the payments and credit ecosystem.

Hyder Jumabhoy, Partner and Global Co-head of the Financial Institutions Industry Group at White & Case LLP

The formal extension of FCA regulation to the BNPL market represents a watershed moment for the consumer finance sector. Bringing BNPL lenders within the UK Consumer Duty regime and ensuring enhanced levels of customer support will materially strengthen protections for borrowers.

For BNPL providers, however, the shift introduces a more complex and costly operating environment. Firms will need to invest in credit risk processes, compliance infrastructure and customer communication machinery at a time when higher interest rates are already increasing funding costs.

This combination of regulatory and economic pressure is likely to accelerate structural change within the market. Smaller or less well-capitalised providers may struggle to absorb the additional burden, creating a need for market consolidation. We would expect well-funded lenders and challenger banks to look closely at acquisition opportunities, particularly platforms with strong merchant partnerships and embedded customer reach. The winners in the consolidation race will inevitably benefit from higher barriers to entry for new participants.

Alexander Berrai, Deputy CEO, emerchantpay

The FCA’s decision to bring Buy Now, Pay Later under regulation is a necessary step for a sector that has become part of everyday payments. Proportionate affordability checks and clearer consumer information should help ensure BNPL is used responsibly and that consumers are not taking on credit they cannot reasonably repay.

Clearer rules around credit assessments should also increase confidence among the financial institutions supporting BNPL, reducing risk and improving stability across the wider ecosystem. Over time, this provides a stronger basis for sustainable innovation and a more responsible expansion of BNPL into additional sectors and use cases.

In the longer term, a more predictable, lower-risk environment may create better conditions for flexible repayment options for consumers, as well as more efficient pricing and improved commercial sustainability for both providers and their funding partners. While outcomes will depend on how the market develops, regulation sets an important framework.

As a BNPL enabler, we welcome measures that prioritise consumer protection, transparency and financial wellbeing. A well-regulated environment ultimately supports consumers, merchants and the wider payments industry.

Sam Riordan, Executive Director of Banking & Payments, Capco

The regulation of Buy Now Pay Later (BNPL), announced by the FCA today, marks a long overdue next step in strengthening consumer protection for a solution that has become hugely popular with UK shoppers.

Originally designed as a short-term way to help customers spread the cost of purchases they could ultimately afford, BNPL can work well when used appropriately. In practice, however, its historically ‘invisible’ status within credit reporting has created gaps in oversight, increasing the risk of uncoordinated borrowing and financial stress for some consumers.

With the regulation coming into force on the 15 July, the focus for firms should now be on proportionality, improving consumer protection without jeopardising the customer experience and flexibility that have driven BNPL’s growth.

Vulnerable customers are particularly exposed when it comes to BNPL solutions, making it critical that firms are able to clearly evidence how they are identifying vulnerability and providing appropriate support. As with other sectors operating under Consumer Duty, firms that fail to prioritise these areas, risk falling foul of the FCA’s increased standards.

Consumer understanding and evidencing will also be key.  Firms will need to demonstrate that customers genuinely understood the agreement that they are entering into, including any charges and costs and the consequences of missed payments. This may also create opportunities for more traditional credit providers, already well versed in these requirements, to enter the BNPL market with greater confidence.

Ultimately, effective regulation should allow BNPL to continue playing an innovative role in the payments journey, while ensuring consumers are protected and retain genuine choice.

Alastair Douglas, TotallyMoney CEO

Regulating Buy Now Pay Later is a positive step, but one which is long overdue. Analysts estimate that up to a third of current BNPL users could lose access once the new rules kick in – which tells you just how many people have already been borrowing without the proper safeguards. 

The problem the government and regulator face next is what fills the BNPL gap once lending is tightened up. If people who’ve relied on for so long suddenly find themselves locked out, they’ll start to look for credit elsewhere – which could push the vulnerable into the arms of unregulated and illegal lenders. 

If you’re borrowing money, make sure you only take on what you need, and that you’ll be able to keep up with repayments. It’s also worth shopping around and looking at all your options, because you might find that a credit card can offer you longer 0% periods with greater flexibility than BNPL. And it’s the job of the financial services to make it as simple as possible for people to weigh up their choices – because these products work in very different ways, making them harder to compare side by side.

Scott Dawson, CEO of DECTA

The FCA’s emphasis on transparency and affordability in its updated framework for Buy Now, Pay Later (BNPL) is a constructive step for the payments ecosystem. As BNPL matures and becomes embedded in everyday commerce, clear rules that reinforce responsible lending and consumer understanding will be critical to sustaining trust and long-term adoption.

The new regime which will bring BNPL agreements under full FCA oversight from July 2026, introduces proportionate affordability checks, clearer disclosures, and access to redress mechanisms such as the Financial Ombudsman Service. These measures are designed to ensure customers can make informed choices while preserving access to flexible, interest-free payment options that many rely on today.

Responsible, transparent lending and strong ecosystem collaboration go hand in hand. Done well, regulation should not slow innovation, it should raise standards, strengthen consumer confidence, and enable sustainable growth in digital commerce.

Christos Doumas, Director, Banking & Capital Markets Advisory & Consulting, Forvis Mazars

The FCA’s announcement is aimed at strengthening consumer protection in a rapidly expanding DPC market, now worth over £13bn. By introducing more robust affordability and creditworthiness checks, clearer disclosures and consistent fair treatment standards, the regulator is seeking to address the risk of consumers taking on multiple agreements without adequate safeguards.

With many users already in financial difficulty and more households facing pressure from inflation, slower growth, and rising unemployment, it is essential that customers fully understand these products and receive appropriate support, particularly if they fall behind on payments.

For firms offering DPC products, preparation needs to start now. Businesses coming under FCA supervision will need to ensure they are ready for authorisation, compliant with the Consumer Duty, and aligned to the new regulatory requirements from day one. This will require well-structured change programmes, timely updates to systems and processes, comprehensive documentation, and rigorous testing. Senior management teams must be confident they can evidence compliance and demonstrate that good consumer outcomes are embedded throughout the product lifecycle.

While the new framework raises the compliance bar, it also presents an opportunity for firms to build greater trust, enhance governance, and differentiate themselves in a market that will now face much closer scrutiny.

Monica Eaton, Founder & CEO, Chargebacks911

The FCA’s decision to bring Buy Now Pay Later into regulation is a logical next step for a product that has moved from niche to mainstream in just a few years. Affordability checks and clearer consumer protections should help reduce unsustainable borrowing, which is good news for both consumers and lenders. 

However, regulation may also change the dispute landscape. As BNPL becomes more formalised, we’re likely to see greater scrutiny around transaction policies, customer communication, and liability between lenders and merchants. Businesses offering BNPL at checkout should start preparing now, because what has traditionally been treated as a payments feature will increasingly be viewed through a regulatory and dispute-management lens.

Tim Ranney, CEO, Congruit Inc.

The FCA’s new rules reinforce what many of us have seen coming — credit decisions can’t rely on static scores alone. When affordability becomes a regulatory requirement, the industry must pay attention to how consumers are managing their financial obligations in real time.

Creditworthiness is no longer just about the consumer’s history or presence of fraud indicators.  It’s about timing, patterns, current capacity, and the consumer’s intent to honour their obligations.  

And the usage patterns on the consumers payment instrument(route/account, card, etc) is becoming much more important in predicting the outcome of a credit obligation.  That’s where the market is heading — not just for compliance, but for better outcomes across the board.

Dan Scholey, CPO, Moneyhub

The FCA is right to focus on affordability for BNPL, but the challenge is doing it intelligently. Traditional credit checks are backward-looking and often miss the early warning signs such as depleting savings, changes in spending or income patterns or financial behaviour changes. Open Finance augments the credit check process and gives us real-time visibility into these patterns.

The smarter regulatory approach would use Open Finance data to identify genuine vulnerability and introduce friction appropriately—rather than blanket restrictions that could penalise responsible users and trigger the £3bn industry ‘hit’ many are fearing. That’s how you protect consumers without destroying a product that millions use effectively as a budgeting tool or for emergency spending.

This is a test case for how we regulate consumer finance in a data-rich environment. If we default to disclosure requirements and paperwork, we miss the point. The harm in BNPL is behavioural, not informational. The technology exists to spot risky patterns before they become credit file damage. Let’s use it.

Chris Jones, Managing Director, PSE Consulting

The FCA’s announcement to bring BNPL directly within its regulatory sphere is a landmark moment for UK consumer finance. Far from stifling the market, these rules signal that BNPL is here to stay, and consumers can be confident they have the same level of protection afforded by other credit products. By introducing mandatory affordability checks, clear product disclosures, and stronger consumer support, the FCA is ensuring all BNPL actors meet the same high standards as the rest of the market. 

In the past, consumer organisations and players in the traditional banking market have raised concerns about the lack of a level playing field for consumer lending, with BNPL exploiting loopholes in regulation. This announcement should put these concerns to rest and allow BNPL to flourish in the mainstream of consumer credit.

With the rapid arrival of AI shopping, there is a significant opportunity to engage consumers around the subject of credit in new ways. The FCA’s rules will need to evolve to ensure that all players in the consumer credit space from BNPL to traditional credit card providers have these conversations in a responsible manner. AI-powered shopping assistants have the ability to explain credit options, compare BNPL with traditional credit options, and help consumers make informed choices in real time. Consumers will need to feel that they are getting unbiased assistance in this process, and the AI platforms are not being unduly influenced by the highest bidder.

An unnamed Clearpay spokesperson added:

Today’s announcement from the Financial Conduct Authority (FCA) is the final step to bring Buy Now, Pay Later (BNPL) under formal regulation on 15 July 2026. We welcome regulation, which will establish a consistent operating environment and clear compliance standards for all providers. 

Clearpay has always called for fit-for-purpose regulation that ensures consumer protection, provides much-needed innovation in consumer credit and supports the UK’s thriving FinTech sector.
Clearpay research highlighted that nearly half of UK adults (48%) are more likely to use BNPL once it is regulated, and with 71% believing that it is important for BNPL to be subject to UK financial legislation, regulation will help foster trust among consumers. It will also create a more sustainable foundation for the future of BNPL, which has become an everyday payment option for consumers.