The FCA’s new regime for deferred payment credit (buy now pay later) comes into force on 15 July 2026. If you provide BNPL lending, you face new authorisation, affordability, and reporting requirements, alongside significant accounting implications.
This change brings a large segment of this previously unregulated lending into the UK’s consumer credit regime, marking a significant development in financial regulation.
BNPL has grown rapidly in popularity due to its convenience and interest-free repayment structure. Consumers can spread the cost of purchases over time, often with minimal friction at the point of sale. However, the absence of consistent regulation has raised concerns around affordability, transparency, and the risk of consumers taking on unsustainable levels of debt.
Implementation timeline
The FCA has provided a structured implementation timeline. The notification window opened on 15 May 2026 , with full regulation taking effect from 15 July 2026. During this period, firms must comply with FCA rules while applying for full authorisation.
Which firms are in scope?
Regulation applies specifically to deferred payment credit provided by third-party lenders through arrangements with retailers. These agreements will become regulated where the lender is separate from the supplier of goods or services. Some exemptions remain, including agreements entered into before regulation begins and certain merchant-provided credit arrangements.
Core FCA requirements for deferred payment credit providers
The FCA framework introduces a number of important obligations for BNPL providers:
- Authorisation: Firms must be authorised by the FCA or operate under a temporary permissions regime while seeking authorisation.
- Affordability Checks: Lenders must carry out proportionate creditworthiness and affordability assessments before offering DPC
- Clear Disclosures: Firms must provide to the consumers transparent and accessible information about repayment terms, amounts, and the consequences of missed payments.
- Consumer Duty: BNPL providers will be subject to the FCA’s Consumer Duty, requiring them to deliver good outcomes for customers and act in their best interests.
- Customer Support: Firms must provide appropriate support to customers experiencing financial difficulty, including clear communication and signposting to debt advice services.
- Complaints and Redress: Consumers will have access to formal complaints processes and the Financial Ombudsman Service on or after 15 July 2026.
Impact on consumers
Consumers are expected to benefit from improved protections, including clearer information, stronger safeguards against unaffordable borrowing, and access to dispute resolution mechanisms. These changes aim to ensure that DPC remains a useful financial tool while reducing the likelihood of consumer harm.
Implications for firms
For DPC providers, the new regime introduces additional compliance, governance, and operational requirements. Firms will need to enhance their risk assessment processes, improve transparency, and align their business practices with regulatory expectations. While this creates additional complexity, it also strengthens trust and credibility in the sector.
The FCA requires enhanced, timely insight into the DPC market and customer outcomes to enable effective supervision. This includes a requirement for fully authorised firms to provide product sales data on their DPC lending activities.
Accounting and financial reporting considerations
The introduction of FCA regulation for the DPC sector is also expected to have accounting and financial reporting implications. While not explicitly prescribed by the FCA, the new requirements may impact recognition, measurement and disclosures under existing IFRS standards.
- Expected credit losses (ECL)
Mandatory affordability assessments may alter the risk profile of DPCportfolios. Firms will need to update IFRS 9 ECL models to reflect revised underwriting standards, forward-looking assumptions, and any changes in default patterns.
- Potential business model changes
Regulation may drive changes to funding structures, risk-sharing arrangements, or partnerships. Where business models evolve (e.g. increased sales or securitisation of receivables), firms may need to reassess classification and measurement under IFRS 9.
- Credit risk disclosures
Greater regulatory focus on transparency is likely to increase scrutiny of IFRS 7 disclosures. Firms may need to enhance reporting on credit risk exposures, arrears trends, and key judgements within ECL models.
How our experts can help
Our lending team acts for many regulated lenders. Please contact us if you have any questions around the FCA authorisation process. We also are able to assist by providing accounting advice in relation to buy now pay later lending
