Buy Now, Pay Later is coming to an end. With new FCA regulations set for 2026, corporate treasurers and risk leaders must navigate a shift toward mandatory affordability assessments and enhanced consumer protections. We break down the regulatory roadmap and what it means for retail conversion and vendor due diligence.
As the UK’s consumer credit landscape undergoes its most significant shift in a decade, the Financial Conduct Authority (FCA) has finalised the rules that will bring the £13 billion Buy Now, Pay Later (BNPL) market into the regulatory perimeter.
From 15 July 2026, lenders offering what the regulator terms “Deferred Payment Credit” (DPC) must comply with the full weight of the FCA’s handbook, including the high bar set by the Consumer Duty. For treasurers, risk leaders, and corporate entities, this transition signals a move from an unregulated environment to a highly scrutinised credit model that demands operational and financial resilience.
The Treasury and the FCA have laid out a clear timeline for firms to transition into the new regime:
15 May – 1 July 2026: A Temporary Permissions Regime (TPR) opens for existing BNPL providers to register.
15 July 2026: The new rules officially take effect. Firms must apply for full FCA authorisation within six months of this date.
Early 2027: Full compliance across all reporting and governance frameworks is expected.
The new framework focuses on three core areas designed to mitigate consumer harm while maintaining the sector’s innovative edge.
Lenders can no longer rely on “click-and-go” approvals. They must now conduct “proportionate” affordability checks to ensure borrowers can meet repayments without falling into financial distress. This may include cross-referencing credit reference agency (CRA) data, even for small-sum loans.
The FCA has refined the information that must be presented to a customer before they sign an agreement. While some administrative details can now be moved to “additional information,” the core terms—repayment dates, amounts, and the consequences of missed payments—must be crystal clear and prominent.
For the first time, BNPL users will have the right to escalate unresolved complaints to the Financial Ombudsman Service (FOS). Additionally, under the Consumer Duty, lenders must proactively support customers in financial difficulty, signposting them to free debt advice rather than simply defaulting to late fees.
The shift from an unregulated to a regulated status carries profound implications for the wider business ecosystem:
Impact on Conversion and Sales Volumes: For retailers and corporates using third-party BNPL providers, the introduction of friction through affordability checks could impact checkout conversion rates. Treasurers should model the potential “origination dip” as consumers with thinner credit files are diverted or declined.
Counterparty and Reputation Risk: While merchant-provided credit (where the retailer is the lender) remains largely exempt, those using third-party providers must ensure their partners are “ready, willing, and organised” for FCA authorisation. A provider’s failure to comply could reflect negatively on the brand and lead to disrupted payment flows.
Liquidity and Capital Planning: As BNPL firms face higher compliance and reporting costs, the “low-margin” nature of the product may lead to market consolidation. Risk leaders should evaluate the long-term viability of their current payment partners.
Treasurers and risk managers play a critical role in navigating this “regulatory cliff-edge”:
Vendor Due Diligence: Review contracts with BNPL providers to ensure they are preparing for the Temporary Permissions Regime (TPR).
Customer Journey Mapping: Collaborate with marketing and UX teams to ensure that the new “Key Product Information” requirements do not unnecessarily obstruct the customer experience while remaining fully compliant.
Data Quality: Support the transition towards better credit data reporting. Improving the accuracy of information provided to CRAs will help the entire sector expand responsible access to credit.
The FCA’s intervention is a double-edged sword: it legitimises BNPL as a mainstream financial tool while imposing a rigorous compliance burden that will test the operational resilience of many fintechs. For the strategic treasurer, the focus must now shift from simple payment integration to a sophisticated oversight of credit risk, regulatory alignment, and consumer outcomes.