FCA Unveils BNPL Regulation Plan Ahead of 2026 Oversight Shift
UK’s “Wild West” of BNPL Faces Regulation
The UK’s Financial Conduct Authority (FCA) has released its long-awaited proposals to regulate the booming Buy Now, Pay Later (BNPL) market. Following years of public debate and rising consumer adoption, the FCA is stepping in to ensure stronger borrower protections, with full regulatory oversight set to begin on July 15, 2026.
BNPL services have soared in popularity, especially among younger consumers, yet until now they’ve operated in a largely unregulated environment. According to FCA research, over 10.9 million UK adults used BNPL in the 12 months to May 2024 — up from 8.8 million in 2022. That’s nearly one in five adults engaging with a system some call the “wild west” of modern finance.
New Rules: Checks, Complaints, and Clarity
The new proposals aim to bring BNPL lenders under a regulatory umbrella focused on affordability checks, support mechanisms, and transparency. Lenders will be required to assess whether borrowers can realistically repay the loan and must provide support if they face financial difficulty.
Importantly, consumers will gain the right to escalate complaints to the Financial Ombudsman Service, aligning BNPL with other regulated credit products. FCA Deputy CEO Sarah Pritchard emphasized the goal of enabling innovation while protecting users:
“Our regulation will help consumers navigate their financial lives, with checks on whether they can afford to repay, support when things go wrong and access to the right information.”
Rather than reinventing the wheel, the FCA will rely on existing frameworks like the Consumer Duty to drive compliance, reducing friction for fintech innovators.
Timeline, Transition & Feedback
To ease the transition, a temporary permissions regime will launch two months prior to enforcement, giving firms time to register before applying for full authorization. The FCA is inviting feedback from lenders, consumer groups, and stakeholders through September 26.
Industry leaders have responded positively. Madhu Kejriwal, CEO of TransUnion UK & Europe, stated:
“Clear, proportionate regulation is essential to protect consumers while enabling innovation and access to flexible payment options.”
This regulatory milestone could mark the maturation of BNPL — shifting it from a growth experiment into a structured pillar of modern credit infrastructure.
