UK BNPL Regime: FCA publishes final rules

On 11 February 2026, the Financial Conduct Authority (FCA) published a policy statement (PS26/1) setting out its final rules on the regulation of Deferred Payment Credit (DPC) – interest-free credit products, repayable in 12 or fewer instalments over a period of 12 months or less – commonly known as “by now pay later” (BNPL). The policy statement follows the FCA’s 2025 consultation (CP25/23), which we considered in our previous blog post. The FCA is making the rules and guidance it consulted on, with some minor changes.

The rules bring DPC lending into the FCA’s regulatory perimeter for the first time. From 15 July 2026, firms offering DPC agreements to finance the purchase of goods or services will be conducting a regulated activity. All merchants who broker DPC agreements (by offering them as a payment method) will remain exempt from regulation.

Elements of the regulatory regime

The new regime primarily extends core consumer credit protections to DPC agreements but also introduces some new requirements. The regime covers the following areas: 

• Conduct standards: Most of the existing conduct rules and guidance in the Consumer Credit Sourcebook (CONC) in the FCA Handbook will now apply to DPC activity (along with requirements in other parts of the FCA Handbook including the Principles for Businesses (PRIN), the Threshold Conditions (COND), the General Provisions (GEN) and the Senior Management Arrangements, Systems and Controls (SYSC) chapter (including the Senior Managers and Certification Regime (SM&CR)).
• Pre-contractual information: The FCA is making new rules to require DPC lenders to provide specific product information to a borrower before they enter into a DPC agreement.
• Missed repayments: Lenders must provide certain information to borrowers who miss a repayment and give notice before taking certain action.
• Mandating creditworthiness checks: The FCA’s existing creditworthiness rules will apply to DPC lending including to agreements of less that £50.
• Dispute resolution: Existing rules in the FCA Handbook on the handling of complaints (the Dispute Resolution: Complaints Sourcebook (DISP)) will now apply to DPC and the “Compulsory Jurisdiction” of the Financial Ombudsman will be expanded to cover DPC activity. 

Key changes since the consultation

Although the final framework is largely as consulted on, the FCA has made some minor amendments in response to feedback. 

Product information

The FCA has refined the new pre-contractual product information rules. To address proportionality concerns, the final rules have been adjusted to make sure that consumers are given “key product information” that is most important to their decision making. 

The requirement to include information concerning the existence of rights to withdraw from (or cancel) the agreement, to complete payments ahead of time, to refer a complaint to the Financial Ombudsman, and to explain what a continuous payment authority is and how it works, have been removed. Instead, that information must be provided in the “additional product information” document which firms must give or make available to a consumer before the agreement is entered into. To ensure that consumers are made aware of the “additional product information”, its existence must be highlighted in the key product information. 

The FCA has also made a small amendment to the piece of key product information that would have required a lender to indicate whether it will obtain information from a credit rating agency (CRA) before deciding whether to proceed with the agreement. The requirement has been amended such that a firm must only indicate whether it will (where this is known), or otherwise may, obtain information from a CRA. This is to reflect that key product information may be given before a firm knows with certainty whether it will obtain information from a CRA as part of that assessment. 

Missed repayments

The FCA has also made minor updates to the protections for borrowers who miss repayments. These are threefold:

• Firms sending missed repayment communications need not set out all the potential adverse outcomes from continued non-repayment. The requirement is that the firm provides sufficient information about any adverse consequences arising from the missed repayment and any other adverse consequences that the firm considers are likely to arise.
• When giving a borrower in arrears notice before terminating a DPC agreement or taking specific steps to enforce a term of the agreement, lenders should signpost to free and impartial money guidance and debt advice and effectively communicate the benefits of accessing it. The FCA makes clear that this update should not be taken to mean that debt advice should not be provided before this point if appropriate.  
• A DPC lender will not be required to notify a guarantor when a borrower misses a payment under a DPC agreement.

Financial Ombudsman Service (FOS) Voluntary Jurisdiction

The FOS’ Voluntary Jurisdiction will not be extended to cover DPC activities. Therefore the Voluntary Jurisdiction will not cover complaints relating to the provision of DPC before the introduction of the new regulated activity nor complaints relating to DPC activities carried out from a European Economic Area or Gibraltar establishment.

Next steps and timeline

The policy statement explains how the FCA will authorise new entrants and how the Temporary Permissions Regime (TPR) will operate to allow firms that do not currently hold the necessary consumer credit permissions to continue to operate. The key dates for firms are:

• From 15 May 2026: Firms undertaking DPC activity without the necessary permissions will need to register for the TPR by 1 July 2026.
• From 15 July 2026:
  • On this date, DPC lending becomes a regulated activity. Any firm that is not fully authorised or registered for the TPR must cease entering into new DPC agreements at this time. Doing so without permission will be a criminal offence. However, firms will be able to continue servicing agreements taken out before this date, as those agreements will remain unregulated.
  • Firms in the TPR will have six-months from 15 July 2026 to apply for full authorisation.

Firms currently undertaking DPC activity will need to consider the FCA’s final rules and make the necessary changes to their systems and controls – for example, they will need to review their customer journeys and ensure they are ready to conduct creditworthiness checks – with the Consumer Duty at the forefront of their mind.