Buy now, pay later becomes a regulated product in the UK on 15 July, and the most demanding part of the new regime lands on the smallest purchases. Under the Financial Conduct Authority’s rules, affordability checks apply to every deferred payment credit agreement, including those under £50.

The regime was set out in Policy Statement PS26/1, published by the FCA on 11 February 2026, and confirmed the same day in a companion press release. Sarah Pritchard, the FCA’s deputy chief executive, said: “We want the Buy Now Pay Later sector to thrive. But crucially, no one should be lent to if they’re unable to repay, because that could worsen their situation.”

Affordability checks now reach every transaction

The core obligation sits in CONC 5.2A, the FCA’s creditworthiness-assessment rule, which from 15 July applies to deferred payment credit as it already applies to credit cards and personal loans. The duty covers every deferred payment credit agreement, with no size threshold, which is why sub-£50 purchases are caught.

There is a carve-out: a firm need not assess income and expenditure if it can show, from data such as lending history and open credit lines, that there is obviously no material affordability risk. That judgement sits with the provider and applies per agreement, so getting it wrong on a book of small transactions compounds fast.

A six-month clock is already running

Firms without existing consumer credit permissions had to register for the FCA’s temporary permissions regime between 15 May and 1 July 2026. Registration alone doesn’t confer full authorisation: firms then have six months from 15 July, until 15 January 2027, to submit a complete application, or their temporary permission lapses.

PKF-L’s timeline of the rollout, published 9 June 2026, adds formal complaints processes, sales data reporting, Consumer Duty compliance, and a less obvious one: updated IFRS 9 and IFRS 7 credit-risk models.

The UK isn’t acting alone: the EU’s second Consumer Credit Directive brings third-party BNPL into scope from 20 November 2026, and Australia has required BNPL providers to hold a credit licence since 10 June 2025.

Complaints now have an independent route

Before 15 July, a UK customer unhappy with a provider’s decision had nowhere independent to take it. From 15 July, deferred payment credit agreements get access to the Financial Ombudsman Service. A disputed affordability call can now be escalated outside the firm, shifting complaints handling from customer service to compliance.

The rules also require lenders to support customers in financial difficulty and, where appropriate, direct them towards free debt advice, echoing affordability concerns Fintechly has flagged before about repayments slipping past a household’s budget.

The rules do not reach every BNPL model

UK regulation applies to lenders offering deferred payment credit to finance purchases from merchants. It does not extend to retailers offering in-house BNPL, or to brokers who arrange deals without lending the money; a retailer’s own scheme sits outside the perimeter in a way a third-party provider embedded at checkout does not.

Retailers embedding BNPL now carry new due-diligence exposure of their own, according to George Toumbev, chief commercial officer at NatWest Boxed, writing on 1 July 2026. Deferred payment credit lending in the UK grew from around £60 million in 2017 to more than £13 billion in 2024.

Adoption has already outgrown the old exemption

The scale of the market is one reason the exemption became hard to defend, a trend Fintechly has tracked as BNPL usage broadened well beyond its early, younger adopters. Research published by TransUnion on 6 July 2026, a consumer survey of 1,000 UK adults carried out with Dynata in February 2026, found that 18% of UK adults hold a BNPL loan, with usage extending into people’s mid-forties.

 The same survey found deferred payment credit is the second most popular form of short-term credit at 21%, behind only credit cards at 51%. This is consumer research, describing stated preference rather than actual transaction data.

 Ben Player, a partner in TLT’s financial services regulatory team, said the regime could mark the start of a more coherent approach to reforming the wider Consumer Credit Act, of which deferred payment credit is one piece. Whether that broader reform follows, or 15 July proves a one-off fix for a single product, isn’t yet clear.