FCA moves to regulate BNPL and protect 11m users

July 21, 2025

The FCA has announced new proposals to regulate the BNPL market, offering millions of UK consumers the same protections afforded to users of traditional credit products.

These measures are set to take effect when BNPL lending comes under the FCA’s remit in 2026.

Among the key proposals are mandatory affordability checks to ensure borrowers can repay their loans, as well as clear obligations on lenders to provide support if customers fall into financial difficulty. BNPL users would also gain the right to escalate complaints to the Financial Ombudsman Service, a protection currently unavailable under the existing unregulated framework.

FCA deputy chief executive Sarah Pritchard said: “We have long called for BNPL products to be brought into our remit, so people can benefit from BNPL while being protected. 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 to make informed decisions.

“We’re mainly relying on existing requirements, including the Consumer Duty, rather than proposing to make lots of new rules, supporting growth and allowing firms to innovate.”

The move comes as BNPL continues to grow in popularity. FCA research revealed that 1-in-5 UK adults—equivalent to 10.9 million people—used BNPL services at least once in the 12 months leading up to May 2024. This marks a significant increase from 17% (8.8 million) in 2022.

While BNPL services offer flexible access to credit and can help consumers spread payments over time, the FCA stressed that these products also carry risks. These include over-borrowing and falling into debt without the usual protections that accompany regulated lending.

In preparation for full regulation, a temporary permissions regime will allow BNPL firms to continue operating under FCA rules while they pursue formal authorisation. The regulator is now seeking feedback from BNPL providers, industry stakeholders and consumer groups to shape the final framework. The consultation is open until 26 September 2025.