What the FCA’s new BNPL protections mean – and what firms should be thinking about

The FCA’s new BNPL protections

The Financial Conduct Authority (FCA) has confirmed a major shift for the Buy Now, Pay Later market, with new protections coming into force on 15 July 2026.

These changes will bring currently unregulated BNPL products under the FCA’s supervision, applying the Consumer Duty and raising conduct expectations across the sector.

With around 11 million adults in the UK using BNPL in the past year, this regulatory step aims to improve consumer outcomes, strengthen transparency and reduce the risk of harm – particularly for those who may be using BNPL frequently or while experiencing financial pressure.

Rather than viewing these regulatory updates solely through a compliance lens, BNPL lenders, retailers and brokers should use this moment to reassess customer journeys, operational resilience and the robustness of their credit and affordability frameworks.

What’s changing?

The FCA has confirmed a series of protections that will reshape how BNPL journeys are designed, communicated and overseen:

• Clear and upfront customer information – including payment dates, amounts due and what happens if payments are missed.
• Proportionate affordability assessments – lenders must check customers can afford to repay before credit is offered.
• Stronger support for customers in financial difficulty – including appropriate referral to free debt‑advice services.
• Access to redress – customers will be able to escalate disputes through the Financial Ombudsman Service.
• FCA authorisation for all BNPL lenders – with a temporary permissions regime opening between 15 May and 1 July 2026.

These changes reflect the FCA’s long‑stated view: BNPL can deliver value for consumers, but only when used responsibly and supported by the same protections applied to other credit products.

For the full regulatory announcement, firms can refer to the FCA’s press release “New protections confirmed for Buy Now Pay Later borrowers.”

What should BNPL lenders, retailers and brokers be thinking about now?

1. How prepared are our affordability and credit‑risk frameworks?
   The shift to proportionate affordability checks will require improvements in data quality, decisioning models and auditability. Many BNPL journeys have historically focused on reducing friction; the new regime demands embedded responsible‑lending controls without compromising the customer experience.
2. Are our customer journeys clear, consistent and Consumer Duty‑aligned? The Consumer Duty will apply across the full BNPL lifecycle. Firms need to ensure customers receive clear, timely and meaningful information at checkout and beyond, with communications designed to support good outcomes and consumer understanding.
3. Can we evidence effective support for vulnerable or struggling customers?
   The FCA expects lenders to act quickly and appropriately when customers show signs of difficulty. This includes trained teams, data‑driven triggers, clear escalation routes and the ability to signpost debt‑advice services. This is an area the regulator will examine closely.
4. Are our operational teams and supplier networks ready for FCA oversight?
   From July 2026, BNPL firms will need to meet the FCA’s authorisation standards. This includes governance, oversight, MI, complaint‑handling processes and the ability to demonstrate controlled, fair and consistent outcomes across both in‑house and outsourced operations.
5. Do we have the right oversight of retailer partners?
   For many BNPL providers, retailers are the primary gateway to the customer. The FCA will expect firms to oversee these relationships effectively — including onboarding, monitoring, conduct‑risk assessments, training and quality‑assurance mechanisms.

What to look for in external support partners

As the BNPL market transitions into a fully regulated environment, firms may need support to strengthen operations, evidential standards and compliance frameworks. When selecting partners, BNPL lenders, retailers and brokers should focus on organisations with:

• Proven experience in regulated lending and Consumer Duty delivery
• Robust complaint‑handling, root‑cause analysis and FOS‑readiness capabilities
• Expertise in affordability frameworks and conduct‑risk assessment
• Strong operational capacity for scaling customer‑contact functions
• The ability to design and implement retailer‑oversight programmes
• Targeted training and upskilling for frontline staff, partners and brokers

BNPL firms will benefit from working with specialists who understand both regulatory expectations and the nuances of high‑volume credit operations.

A pivotal moment for the BNPL sector

BNPL has grown rapidly – from £0.06bn in 2017 to over £13bn by 2024, and has become a mainstream part of the payment ecosystem.

Regulation is not designed to stifle this growth; the FCA has emphasised that it wants the sector to “thrive” by ensuring lending is sustainable and customers are protected.

The firms that act early, strengthen their frameworks and embed a customer‑outcomes mindset will be best positioned to grow sustainably in the regulated future of BNPL.

Read the full FCA announcement here: https://www.fca.org.uk/news/press-releases/new-protections-confirmed-buy-now-pay-later-borrowers

See how Huntswood can assist with firms that : https://www.huntswood.com/buy-now-pay-later/