The consumer headline on 15 July was exclusion: how many current users the affordability checks might price out. That is the wrong place for an operator to look. The more durable effect of bringing deferred payment credit inside the Financial Conduct Authority’s perimeter is a redistribution of value across the market, and most of it flows to two groups that will never appear at a checkout.

The first is the layer that sells affordability itself. The second is the set of lenders that already ran bank-grade governance before anyone made them. For a senior operator, investor or regulator, that is the story the go-live actually tells. 

Key takeaways 

  • The rules turn affordability checking from an optional soft-credit step into a service every deferred payment credit lender must buy, creating a market for credit-data and open-banking vendors.
  • Fixed compliance and authorisation costs fall hardest on sub-scale independents; lawyers expect consolidation, with capitalised incumbents and the largest merchants best placed to absorb them.
  • Firms that already ran bank-grade governance, such as Secure Trust Bank’s V12 and Klarna, meet the rules as a baseline, so the bar reads to them as a moat rather than a cost.

 

A mandatory market for affordability 

The core obligation is narrow to describe and wide in its consequences. From 15 July, a lender must run a creditworthiness assessment before every deferred payment credit agreement, including purchases under £50, under the FCA’s CONC 5.2A rule. What was a competitive choice about friction is now a legal floor.

That floor has to be built on data, and the incumbent credit file doesn’t fully carry it. “Credit bureau data can lag by 30 to 60 days,” David Firth, product director at Moneyhub, told Retail Banker International, arguing that open banking is now essential to a real-time affordability call. A late file is a compliance exposure when the duty applies to every small ticket.

So the mandate creates demand for a service. Credit-reference agencies, open-banking data providers and decisioning platforms are the firms that sell it, and they are positioning openly. James O’Donnell, director of research and consulting at TransUnion, framed the shift as consumer reassurance, citing research that 42% of users say affordability checks would make them feel safer. TransUnion also happens to sell the affordability data that produces those checks.

The requirement to run the check instantly, inside the purchase, favours vendors who can deliver decisioning at transaction speed. “Affordability checks can’t be a separate step tacked onto checkout,” said Radi El Haj, chief executive of payments processor RS2, in the same reaction. That is a product specification aimed straight at the infrastructure buyer, and every regulated BNPL lender is now that buyer.

The compliance bill lands on the small

Regulation writes a recurring cost into the business model, and a fixed compliance cost is regressive by scale. A large lender spreads authorisation, monitoring and reporting across billions in volume; a small independent spreads the same cost across far less.

The people advising the sector are candid about where that leads. “Smaller providers could decide that the cost and complexity of compliance are too great,” said Nina Moffatt, a fintech and regulation partner at Paul Hastings. “That is likely to lead to further consolidation.” FTI Consulting, in an April note on the regime, expects weaker players to “exit, scale back or spend significant resources on regulatory remediation.”

Much of that remediation is technical. Legacy checkout-led platforms were built to approve, not to evidence. “Many financial institutions still lack the infrastructure needed to connect customer data, credit decisioning and compliance controls,” said Stiven Muccioli, chief executive of BKN301. Robert Kraal, co-founder of Silverflow, put the same point on the plumbing: “legacy platforms built decades ago struggle to tag, trace and report at the resolution modern regulation now assumes.” Rebuilding that stack is a capital decision a sub-scale provider may not be able to justify.

The authorisation clock sharpens the pressure. Firms without existing consumer-credit permissions had to register for the temporary permissions regime between 15 May and 1 July, and now have six months, until 15 January 2027, to file a complete application or lose the permission. A provider that misses the gateway doesn’t get a warning; it loses the right to lend.

Regulation as a moat

A reading that treats compliance only as a burden misses the structural effect. If the bar is high and the cost is fixed, the firms that already clear the bar gain the most. On this analysis the biggest structural winners among lenders are the ones that welcomed the rules first.

Their public posture gives the game away. Andrew Phillips, managing director of Secure Trust Bank’s V12 Retail Finance, called the regime “both welcome and overdue” in a 5 July article, framing it as a protective shield for the consumer and the wider economy. V12 sits inside an authorised bank that has run CONC-grade lending for years. For it, CONC 5.2A is a standard already met, not a wall to climb.

Klarna reads the same way. “Klarna has prepared for regulation since calling for it in 2020, so we welcome this moment,” said Luke Seaman, its head of global policy, on the day the rules began. A firm that lobbies for the rulebook it is confident it can meet isn’t being altruistic; it’s asking the regulator to raise a barrier its smaller rivals cannot afford. The enthusiasm is real, and so is the commercial logic underneath it.

The point generalises. The merchant carve-out, which leaves a retailer’s own in-house instalment scheme outside the perimeter, tilts the same way. “The carve-out for merchant-provided DPC is most valuable to the largest retailers and platforms,” said Scott Dawson, chief executive of DECTA. “Smaller merchants, who depend on third-party providers, will carry the regulated cost while their biggest competitors do not.” Scale wins on the lending side and on the retail side at once.

The bet the winners are making

None of this is settled, and the counterweight is a real one. Fair4All Finance estimates the checks could exclude 10% to 30% of current users and warns of a £2 billion supply gap in small-sum lending, a caution its chief executive Kate Pender repeated as the rules went live. If affordability infrastructure over-tightens, the market it underwrites gets smaller, and a shrinking market is a smaller prize for the vendors selling into it. 

That is the tension worth watching. The affordability layer profits either way in the near term, because the check is now compulsory whatever it returns. Over a longer horizon its fortunes track the size of the regulated market, and that size depends on whether the same infrastructure is tuned to extend credit responsibly or simply to refuse it.

For now the value has already moved. It moved from the checkout, where the consumer story lives, to the compliance layer and the balance sheets strong enough to carry it. The open question isn’t who gets excluded this quarter. It is whether the firms that now underwrite the entire market choose to build access or to gate it