Getting ready for the FCA's Buy Now Pay Later Regime

TLT picks out the key points you shouldn't miss...

The FCA has confirmed in PS26/1 (published on 11 February 2026) that draft rules relating to deferred payment credit (DPC) it consulted on back in July 2025 will be taken forward, largely unchanged.

The rules will apply from 15 July 2026 and require DPC lenders to provide borrowers with pre-contractual information, information during the course of the DPC agreement and when a customer misses a payment, as well as complete creditworthiness and affordability assessments on borrowers. DPC lenders will also be subject to all other relevant sections of the FCA handbook.

For those DPC lenders that are not already authorised and wish to continue lending beyond 15 July 2026, entry into the FCA’s temporary permissions regime (TPR) will be essential. The registration window for the regime opens on 15 May 2026 and closes on 1 July 2026.

Ben Player, a Partner in TLT's Financial Services Regulatory team who has been recognised in both Chambers and Partners and Legal 500 as a consumer finance expert, says…

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“DPC lenders will be pleased to see minimal changes to the rules consulted on in July 2025 as regulation day approaches. The FCA has clearly given careful consideration to the DPC rules, and these could now form the start of a sensible approach for CCA reform more generally to create the ‘level playing field’ advocated for by many in the industry. It will also be a test of the Consumer Duty, which the FCA will need to rely on heavily to police the DPC regime in the absence of prescriptive rules.

This may also be an opportunity missed by the FCA for even greater flexibility and innovation. For example, ‘durable medium’ requirements and language persists at a time where many DPC lenders use apps to communicate and store information which is easily accessible, and creditworthiness assessments are required in respect of each DPC agreement in circumstances where some lenders undertake ‘overall’ credit line assessments given the potential for lending to be high-frequency."

The points not to miss...

Consumer Duty remains the foundation of the “Buy Now Pay Later” (BNPL) regime

While the FCA is introducing specific rules for DPC, they are not prescriptive. The FCA will rely on the Consumer Duty as its main regulatory tool for policing DPC lenders. Consumer protection and competition remain central to how the FCA has shaped the regime.

Conduct standards will now apply fully to DPC lenders

The FCA is extending the requirements in its consumer credit sourcebook (CONC) to DPC lenders. The FCA is also:

introducing new rules requiring DPC lenders to give borrowers clear key pre‑contract information and specific information when a borrower has missed a repayment (e.g. information about how the borrower can obtain free debt advice), as well as to give sufficient notice to borrowers before taking any action against them due to their failure to meet payments; and
introducing guidance to remind DPC lenders of their obligations under the Consumer Duty’s consumer understanding and consumer support outcomes.

This is one area where the FCA has made changes to the draft rules it consulted on back in July 2025 and will now allow DPC lenders to provide a ‘lighter touch’ key information document and include information which is less likely to influence consumer decision-making in the additional information document.

DPC lenders must also choose communication channels that genuinely support effective decision‑making and comply with new information provision duties, in accordance with the general principles set out in CONC 7.

Creditworthiness assessments now cover all DPC agreements

Existing CONC 5.2A creditworthiness rules will apply to DPC lending, including agreements under £50. This ensures affordability and responsible lending standards are aligned with the wider consumer credit market.

Key FCA Handbook modules will apply to DPC activity

PRIN, COND, GEN and SYSC will apply to DPC lenders, embedding expected standards on governance, systems and culture on DPC lenders’ activities. The SM&CR will not apply to DPC lenders in the TRP, though transitional rules will apply where DPC lenders are already authorised for other activities.

Regulatory reporting duties extend to DPC lenders

Fully authorised DPC lenders must submit transaction‑level product sales data returns and aggregated reporting in line with existing schedules. DPC lenders operating in the TPR will not submit aggregated returns until fully authorised, unless required under other permissions.

DISP rules and Ombudsman access will cover DPC complaints

The FCA is applying full DISP complaint‑handling requirements and the Financial Ombudsman’s compulsory jurisdiction is expanding to cover DPC. Complaints reporting requirements are suspended for TPR DPC lenders, and FSCS protection will not extend to DPC activities.

How firms will get authorised under the new DPC regime

Only DPC lenders that were carrying out DPC activity on 15 July 2025 will be eligible to enter the TPR, and they must notify the FCA before 1 July 2026.

Applications to enter the TPR must include evidence of preexisting DPC activity, firm and controller details, senior manager information, and payment of the required registration fee.

The FCA will open the TPR notification window on 15 May 2026, closing it two weeks before 15 July 2026. Following the latter date, DPC lenders then have a six-month window to apply for full authorisation, with temporary permission ending if they fail to do so.

The FCA will also publish Directions ahead of 15 May 2026 setting out the exact notification method, information requirements and applicable fees, and DPC lenders will additionally need to submit projected DPC income and lending volumes to support fee and eligibility assessments.

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Key next steps

DPC lenders must act quickly to secure their ability to continue DPC lending beyond 15 July 2026 by notifying the FCA for TPR entry. Entering new DPC agreements after 15 July 2026 without doing so will be a criminal offence (though existing pre-regulation day agreements may still be serviced).
DPC lenders should also ensure they’re operationally ready to comply with all the FCA rules which will apply to them on and from 15 July 2026.
DPC lenders must also turn their minds to preparing a high-quality full authorisation application, engaging with FCA supervisors on issues such as creditworthiness and vulnerable customers, and notifying the FCA of any material changes during the TPR period.
At the same time, retailers and lenders should audit all BNPL-related financial promotions and customer journeys to ensure compliance, update systems and staff training to embed affordability checks, disclosures and customer support obligations, and strengthen partnership agreements to clearly allocate responsibilities for complaints, liabilities and aftercare while confirming BNPL partners are on track for authorisation.

At a glance

Publication link	PS26/1 Regulation of Deferred Payment Credit (unregulated Buy Now Pay Later)
Published date	11 February 2026
Who has published it?	FCA
Publication type	Policy Statement
Any key dates?	TPR notification window: 15 May 2026 - 1 July 2026. Regulation day: 15 July 2026.
What's it relevant to?	CCA, Deferred Payment Credit, Buy Now Pay Later, Consumer Credit Reform

Contributor: Nadina Miltiadou

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2026. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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