FCA launches BNPL temporary regime

The Financial Conduct Authority opened registration on May 15 for a temporary permissions regime covering buy-now-pay-later lenders, the first operational step before the sector comes under UK regulation on July 15, 2026. The regime applies to deferred payment credit, the legal term used in the rules for interest-free BNPL products that have largely sat outside the FCA perimeter. Firms that do not already hold the right consumer credit permissions must notify the FCA by July 1, 2026 if they want to keep operating while seeking full authorisation. The FCA set out the timetable in its policy statement and BNPL guidance pages, and law firm Baker McKenzie flagged the launch in a client note published on May 15. ### Which firms need to act before July 1? The FCA said lenders carrying on deferred payment credit activity without the necessary consumer credit permissions need to register for the temporary permissions regime between May 15, 2026 and July 1, 2026. Firms already authorised for the relevant permissions do not need the temporary route to continue regulated activity. The regulator’s BNPL page says the regime is intended to bridge the period between the law taking effect and firms obtaining full authorisation. (fca.org.uk) Baker McKenzie said the in-scope firms are lenders offering BNPL products that fall within the new regime and that the process requires a notification form and a 280-pound fee. The law firm said firms should start preparing governance, systems and customer documentation for the full regime rather than treat the temporary permission as a stand-alone filing. (fca.org.uk) ### When does BNPL become a regulated activity in the UK? The FCA said it will start regulating deferred payment credit on July 15, 2026. Its policy statement says the government made the legislation on July 14, 2025 to bring BNPL into regulation from that 2026 “Regulation Day.” The underlying statutory instrument, the Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025, provides for certain BNPL agreements that were previously exempt to become regulated credit agreements. (bakermckenzie.com) HM Treasury said in a June 2025 update that it had published its final position and laid the draft legislation to bring BNPL products into regulation. (fca.org.uk) ### What consumer protections is the FCA adding? The FCA said in a February press release that the final rules will require BNPL firms to check that people can afford to repay, give support when customers face financial difficulty and provide access to the Financial Ombudsman Service. The regulator also said borrowers will be able to complain to firms and, if unresolved, escalate complaints to the ombudsman. (legislation.gov.uk) The FCA said the market has expanded from 0.06 billion pounds in 2017 to more than 13 billion pounds in 2024. That growth formed part of the regulator’s case for bringing deferred payment credit into the same supervisory framework as other consumer credit activity. ### How long can firms rely on temporary permission? (fca.org.uk) The FCA said firms that enter the temporary permissions regime will have six months from the date the regime comes into force to apply for full authorisation. That means the temporary route is not a substitute for authorisation, but a limited window to keep operating while an application is prepared and assessed. (fca.org.uk) Hogan Lovells and other advisers have told clients to use the period before July 15 to make systems and controls changes needed for the final rules. Those include disclosures, affordability processes and complaints handling arrangements set out in the FCA package. ### Where can firms find the formal FCA materials? (fca.org.uk) The FCA has published the main implementation materials on its “Regulating Buy Now Pay Later” page and in Policy Statement PS26/1. Those pages set out the start date of July 15, 2026, the temporary permissions window from May 15 to July 1, and the steps firms must take before seeking full authorisation. (hoganlovells.com) July 1, 2026 is the next filing deadline for firms that need temporary permission, and July 15, 2026 is the date deferred payment credit comes under FCA regulation. Firms entering the temporary regime then have six months from that start date to submit full authorisation applications, the regulator said. (fca.org.uk 1) (fca.org.uk 2)