FCA sets out BNPL oversight proposals

Editorial

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After years of wrangling, in May the government finally outlined its plans to clamp down on what it describes as the ‘wild west’ of buy now, pay later lending.

As part of this, from 2026 BNPL oversight will shift to the FCA, which has now set out its proposals in a consultation paper.

BNPL has quickly gained huge popularity, with the FCA’s own research finding that one-in-five UK adults -10.9 million – had used it at least once in the 12 months to May 2024, up from 17% – 8.8 million – in 2022.

Under the FCA plans, lenders will be required to check that people can afford to repay BNPL loans and to offer support if they get into financial difficulty. Borrowers will also be able to complain to the Financial Ombudsman Service if something goes wrong.

Sarah Pritchard, deputy chief executive, FCA, says: “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.”

To smooth the transition, there will be a temporary permissions regime open for firms to register two months before the rules comes into force on 15 July 2026. Providers will then have six months to apply for full authorisation.

Lenders, consumer groups, the wider industry and other interested parties will be able to provide feedback on the proposals until 26 September.