Buy Now Pay Later, generally interest-free credit repayable in instalments over a short period, sat outside FCA regulation for years, unlike a regulated cash advance or personal loan. That changed on 15 July 2026, when the FCA began regulating this type of borrowing directly under a new regulated activity.
What the FCA now regulates
From 15 July 2026, the FCA regulates deferred payment credit, referred to as DPC: interest-free Buy Now Pay Later agreements repayable in 12 or fewer instalments over a term of 12 months or less. This is the product most people mean when they refer to Buy Now Pay Later at online checkouts. Agreements entered into before 15 July 2026 are not brought within these new protections retrospectively; the rules apply to DPC agreements made from that date onward.
Affordability checks are now required
Firms offering DPC must now check whether a borrower can afford to repay before entering into the agreement, bringing this type of credit in line with the affordability assessment requirements that already applied to other regulated consumer credit, including a cash advance, covered elsewhere on this site. Before regulation, a BNPL provider was not required by the FCA to carry out this kind of check, which was one of the main gaps campaigners and the FCA itself had identified.
Clearer information before borrowing
Lenders must now give borrowers pre-agreement information covering the amount being borrowed, the repayment schedule and amounts, any late fees, and the rights and protections the borrower has under the agreement. This mirrors the kind of pre-contract information already required for other regulated credit agreements, giving a BNPL user the same kind of documentation to check before committing as they would get with a regulated loan.
What happens if a payment is missed
Where a borrower misses a payment, firms are now required to contact them to explain what has happened and what it means for the agreement, rather than simply applying a late fee or escalating silently. Firms must also provide support to borrowers who are struggling to keep up with repayments, reflecting the same kind of forbearance expectations that apply to other regulated lenders when a borrower falls into arrears.
Section 75-style protection
One of the most significant practical changes is that borrowers using DPC now have protection similar to Section 75 of the Consumer Credit Act 1974, meaning that if something goes wrong with the goods or services bought using Buy Now Pay Later, the borrower may be able to claim a refund through the credit provider, not only through the retailer. This protection did not exist for BNPL purchases before regulation took effect, leaving a borrower reliant solely on the retailer if goods were faulty or a company went out of business.
Access to the Financial Ombudsman Service
Borrowers with an unresolved complaint about a regulated DPC agreement can now take that complaint to the Financial Ombudsman Service, the same free, independent complaints route already available for other regulated credit, including a cash advance, and covered elsewhere on this site. Before regulation, a BNPL user had no equivalent formal right to escalate an unresolved dispute to the Ombudsman.
What did not change
The new rules apply specifically to DPC agreements entered into from 15 July 2026. They do not retrospectively apply the same protections to a Buy Now Pay Later agreement taken out before that date, and BNPL products structured differently, for example longer-term interest-bearing credit, may already have been regulated under existing consumer credit rules before this change, or may fall under different provisions depending on their structure. A borrower unsure whether a specific BNPL agreement is covered should check the terms provided at the point of borrowing, which regulated firms are now required to set out clearly under the new rules.
FAQs
When did BNPL become FCA-regulated?
The FCA began regulating deferred payment credit, interest-free BNPL repayable in 12 or fewer instalments over up to 12 months, from 15 July 2026.
Do the new rules apply to a BNPL agreement taken out before July 2026?
No. The protections apply to deferred payment credit agreements entered into from 15 July 2026 onward.
Can a BNPL user now complain to the Financial Ombudsman Service?
Yes, for a regulated deferred payment credit agreement, borrowers can take an unresolved complaint to the Financial Ombudsman Service.
Do BNPL borrowers now get protection if goods are faulty?
Borrowers using regulated deferred payment credit now have protection similar to Section 75 of the Consumer Credit Act 1974, allowing a claim against the credit provider in some circumstances.
Bottom line
Since 15 July 2026, interest-free Buy Now Pay Later credit repayable over 12 months or less has been FCA-regulated as deferred payment credit, bringing affordability checks, clearer pre-agreement information, arrears support, Section 75-style protection and Financial Ombudsman Service access that did not previously apply to this type of borrowing. This article is general information, not financial advice; a specific agreement’s terms should be checked to confirm whether it falls within the new regulated category.