The UK Financial Conduct Authority (FCA) published its regulatory framework for Deferred Payment Credit (DPC), commonly known as Buy Now Pay Later, on July 16, 2025, with a formal consultation period that closed on September 26, 2025. The regulation will take effect on July 15, 2026, making the UK one of the first major markets to bring BNPL under formal financial services oversight.
The framework requires DPC lenders to conduct creditworthiness assessments for every transaction, including those below 50 pounds. Before entering any agreement, firms must display key product information covering the customer’s obligations, credit amount, payment schedule, cash price, key risks, and whether credit reference agency checks will be conducted.
Arrears handling requirements mandate that lenders promptly contact customers about missed payments, explain adverse consequences, give reasonable notice before enforcement, and signpost free debt advice. The Financial Ombudsman’s jurisdiction will expand to cover DPC activity, giving consumers access to dispute resolution.
Firms that do not currently hold consumer credit permissions can enter a Temporary Permissions Regime (TPR) on the regulation’s effective date, allowing continued operation while applications are processed. Once registered, firms have six months to submit full applications.
The UK’s approach contrasts with the U.S., where federal BNPL oversight remains fragmented after the CFPB rescinded its interpretive rule in May 2025. In Europe, the Consumer Credit Directive II (CCD II) brings BNPL under similar oversight by end of 2025, creating a global regulatory convergence that providers like Klarna, whose recent NYSE listing valued the company at over 14 billion dollars, must now navigate across multiple jurisdictions simultaneously.
Related: Affirm Reaches GAAP Profitability for the First Time
