One could be forgiven, amidst the noise and glamour of the Leeds Reforms and the Mansion House speech, for having missed the snappily titled Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025, which was made on July 14. But it’s here, and it’s official: buy now, pay later (BNPL)—or, as we should now call it, deferred payment credit (DPC)—is joining the ranks of regulated credit products.
As those of you who have been following the saga will know, the regulatory perimeter is being extended to include interest-free short-term credit offered by third parties. Merchants who finance their own instalment plans will continue to be able to rely on the current exemption.
Following hard on the legislative heels of the order is the FCA’s 186-page CP25/23 Deferred Payment Credit (unregulated Buy Now Pay Later): Proposed approach to regulation consultation. This is the main step in putting the flesh on the bones of the new regime, which will come into force on July 15, 2026 (Regulation Day).
As expected, all the usual requirements such as the Senior Managers and Certification Regime and the Principles for Businesses (including, of course, the Consumer Duty) will apply in full.
The temporary permissions regime registration window will open two months before Regulation Day and close two weeks before Regulation Day—so a short timeframe there. But has the FCA delivered on HM Treasury’s promise for a proportionate approach?
Overall, yes—but perhaps the approach isn’t as light touch as we might have hoped. Let’s look at some of the key proposals in a little more detail.
Affordability assessments
DPC is clearly a popular, cheap and useful form of credit and the FCA (like the Treasury) has no wish to make it too difficult to access. However, it is clear that it must be affordable for borrowers. As anticipated, creditworthiness assessments will be required in all cases but, perhaps disappointingly, no changes are proposed to the existing CONC rules for DPC. While the FCA says that this is because the rules are already flexible enough, this could leave lenders with operational complexity in running and defending two-tier assessments based on the same rules.
Pre-contract information—here to stay
A new type of disclosure, “key product information”, is introduced. Before a customer enters into an agreement, a lender must provide certain information covering key matters including the interest rate, amount of credit, repayments, consequences of non-payment and withdrawal rights. Other mandatory information, which includes early settlement, section 75 protection, continuous payment authority mechanics, and full terms and conditions (referred to as “additional product information”) must be given or, interestingly, can be made available, as long as it is easily accessible.
Form and content of agreements
Read alone, the new requirements for pre-contract information could lead one to believe that the dial hasn’t actually moved very much—the requirements are fairly similar to what we have now, in fact. That said, the statutory requirements as to form and content of agreements under section 60 of the Consumer Credit Act 1974 (CCA) are switched off for DPC, and there are no mirroring requirements in the proposed rules.
Rather, immediately after the agreement is made, the firm must give the customer, or make available, in a durable medium, a copy of the agreement and (unless the information is embodied in the agreement or has already been provided in a durable medium) the key product information and additional product information.
It therefore seems that “light touch” agreements could become the order of the day for DPC.
Missed payments and financial difficulty
Firms will be required to contact customers as soon as possible after a missed instalment, setting out what is due, the consequences, and how to remedy the position. Reasonable notice will be required before enforcing, demanding early payment or terminating the agreement.
The CONC 7 rules and guidance arrears and forbearance rules will apply in full, including the November 2024 enhancements on vulnerability, tailored support and cost-reflective late fees.
Complaints and redress
The DISP rules will extend to DPC as part of the Compulsory Jurisdiction, giving firms an eight-week deadline for final response letters and a right of referral to the Financial Ombudsman Service.
What next?
The consultation ends on September 26, 2025, and the FCA has said that it plans to issue a policy statement with final rules early in 2026, ready for the grand switch-on on Regulation Day. July 15, 2026 will come round very quickly, so it is important to engage with the consultation— it looks as if this will be the only real opportunity for BNPL lenders to further influence the final rules, before getting ready for the brave new world of DPC.
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