Buy Now Pay Later Comes Under FCA Regulation

Consumers using Buy Now Pay Later services now have greater protection following the introduction of new regulation by the Financial Conduct Authority (FCA).

From 15 July 2026, the FCA began regulating Deferred Payment Credit (DPC), the interest-free form of credit commonly known as Buy Now Pay Later. DPC typically allows consumers to spread the cost of purchases across 12 or fewer instalments over a period of no more than 12 months.

Previously, many DPC agreements were outside FCA regulation. Under the new rules, third-party lenders providing these agreements must now be authorised by the FCA or operate under its temporary permissions regime.

The changes introduce important new protections for borrowers. Before providing credit, lenders must carry out checks to ensure customers can afford their repayments. Consumers must also receive clear information about how much they are borrowing, the size and timing of repayments, potential late fees and their rights and protections.

Lenders are also required to provide appropriate support when customers experience financial difficulties. Consumers who are unhappy with how they have been treated can complain to their lender and may subsequently take their complaint to the Financial Ombudsman Service.

The changes are particularly significant given the rapid growth of Buy Now Pay Later. FCA figures show DPC lending increased from just £60 million in 2017 to more than £13 billion in 2024.

The new rules should help ensure that short-term borrowing is accompanied by stronger safeguards, particularly for consumers who may be experiencing financial difficulty.