Glossary · UK
What is BNPL FCA Regulation?
Forthcoming regulation bringing unregulated Buy Now, Pay Later credit agreements under FCA oversight, giving BNPL users credit-agreement protections and affordability checks they currently lack.
Full Definition
Buy Now, Pay Later (BNPL) products — which let shoppers split a purchase into several interest-free instalments, offered by providers such as Klarna and Clearpay — have historically fallen outside most UK consumer credit regulation because of an exemption for short-term, interest-free credit agreements repayable in a small number of instalments. Following years of consultation after an initial 2021 review found evidence of BNPL users taking on unaffordable debt without standard credit protections, the government has confirmed it will bring most BNPL lending within FCA regulation. Under the reformed regime, BNPL providers will need FCA authorisation, must carry out affordability and creditworthiness checks before lending, must provide clear pre-contract information, and BNPL agreements will fall within the scope of the Financial Ombudsman Service, giving users a free route to dispute resolution that unregulated BNPL customers previously lacked. As of 2026 the detailed rules and implementation timetable for full FCA regulation were being finalised, following draft legislation laid before Parliament.