FCA Deferred Payment Credit Regulation: What BNPL Lenders Need to Know Before 15 July 2026

Deferred Payment Credit (DPC) - the regulatory term for many Buy Now Pay Later products - is about to move into the FCA perimeter. From 15 July 2026, lenders offering in-scope DPC agreements will need the right FCA consumer credit permission, or a DPC temporary permission under the Temporary Permissions Regime (TPR). The notification window is already open: eligible firms can notify the FCA from 15 May 2026 until 1 July 2026.

For lenders, fintechs and retail finance providers, this is more than a permissioning deadline. The final rules bring DPC lenders into a conduct regime covering consumer understanding, affordability, missed payments, complaints, Financial Ombudsman access, Consumer Duty, regulatory reporting and ongoing supervision.

The practical message is simple: firms should use the remaining window to confirm whether their model is in scope, choose the right authorisation route, and evidence that their products and customer journeys are ready for FCA scrutiny.

What is Deferred Payment Credit?

The FCA describes DPC as an interest-free credit product used to finance goods or services, repayable in 12 or fewer instalments over 12 months or less. The FCA uses “DPC” because that is the terminology used in the legislation bringing this activity into regulation, even though the product is more commonly called BNPL.

DPC has grown rapidly. In PS26/1, the FCA said the DPC market grew from £0.06bn in 2017 to over £13bn in 2024, and that its 2024 Financial Lives Survey found 20% of UK consumers, or 10.9 million adults, used DPC in the 12 months to May 2024.

Which DPC firms will be regulated?

The core rule is that third-party lender DPC agreements will become regulated credit agreements. DPC will be regulated where the lender and the supplier of goods or services are not the same person, and there is an arrangement between the merchant and lender so the lender becomes the legal supplier of goods or services to the customer.

The FCA has also confirmed important exclusions. DPC agreements provided directly by the merchant itself will not be regulated, DPC broking will remain exempt, and agreements entered into before Regulation Day will remain exempt. The FCA also says third-party DPC will not be regulated where it finances insurance premiums, funds employee borrowing, or is provided by registered social landlords to specified tenants, leaseholders or shared owners.

This means lenders should not assume that every BNPL-style journey is treated the same way. The regulatory analysis turns on the structure of the lender, merchant, supplier relationship, the date of the agreement, and the nature of the financed goods or services.

FCA Deferred Payment Credit requirements

1. Authorisation or temporary permission

From Regulation Day, a DPC lender entering into a regulated DPC agreement must either hold the relevant FCA consumer credit permission or have DPC temporary permission. The FCA says firms that do not currently hold the necessary consumer credit permissions can enter the TPR so they can continue operating temporarily while the FCA considers their application.

To enter the TPR, a firm must have been carrying on DPC activity on 15 July 2025, notify the FCA, and pay the relevant fee. The FCA’s Directions confirm that notification can be made from 15 May 2026, must be submitted using the FCA form, must be made by 1 July 2026, and carries a £280 fee.

2. Consumer Duty readiness

The FCA explicitly links DPC regulation to the Consumer Duty. Firms preparing for TPR must ensure they are compliant with the Consumer Duty from Regulation Day, including fair value, customer support and delivery of good retail customer outcomes.

This is likely to be a central FCA authorisation theme. A DPC lender should be ready to evidence how its checkout journey, customer communications, affordability model, fees, arrears handling and complaints process deliver good outcomes.

3. Pre-contract product information

The FCA is introducing bespoke DPC product information rules. Before a regulated DPC agreement is made, the firm must give the customer key product information and give or make available additional product information.

The key product information includes the interest rate, amount of credit, number and frequency of payments, payment amounts, cash price of the goods or services, consequences of missed payment including late fees and possible credit rating impact, whether the lender will or may obtain credit reference agency information, and how the customer can access full terms and conditions.

Additional product information includes the identity of the lender and supplier, withdrawal or cancellation rights where applicable, early payment rights, Financial Ombudsman referral rights, return-of-goods interaction, further adverse-consequence information, section 75 or 75A protections where relevant, continuous payment authority explanations where used, and contractual terms and conditions.

4. Creditworthiness and affordability assessments

The FCA is applying its existing creditworthiness rules to DPC lending, including agreements below £50. In PS26/1, the FCA confirmed it would apply CONC 5.2A to DPC, and said firms should use judgement to ensure the depth of individual assessments is proportionate and appropriate.

For authorisation, firms should expect the FCA to scrutinise how they assess credit risk, determine affordability, use internal or third-party data, identify customers at risk of financial difficulty, manage arrears and monitor lending and arrears data. The FCA’s consumer credit lender authorisation page says lenders should evidence these policies and processes in their application material.

5. Missed payments, arrears and debt advice

DPC lenders will need to give borrowers information when a payment is missed. The final rules require firms to notify the borrower that a missed payment has occurred, explain unpaid sums including charges for non-compliance, identify which DPC agreement is affected, explain actual or likely adverse consequences, and explain steps the borrower can take to mitigate those consequences where relevant.

Before taking specified enforcement or termination action, firms must give reasonable notice. Where the borrower is in arrears, the firm must also inform them that free and impartial money guidance and debt advice is available from not-for-profit debt advice bodies and communicate the potential benefits of accessing that support.

6. Complaints, Financial Ombudsman and section 75

The FCA is applying DISP complaint-handling rules to DPC and expanding the Financial Ombudsman Service’s compulsory jurisdiction to DPC activities. The FCA has also confirmed it will not extend Financial Services Compensation Scheme cover to DPC activities, in line with its approach to most consumer credit activities.

Consumers will have the right to complain to their lender and, if unhappy with the response, refer eligible complaints to the Financial Ombudsman for DPC agreements entered into after Regulation Day. The FCA’s consumer page also states that section 75 Consumer Credit Act protection will be available from 15 July 2026 where something goes wrong with goods or services bought using DPC.

7. Regulatory reporting

Fully authorised DPC lenders will be subject to existing FCA regulatory reporting requirements, including Product Sales Data and aggregate regulatory returns, with transitional provisions. Firms operating under DPC temporary permission are subject to specific Handbook modifications, including temporary disapplication of certain SUP 16 and DISP complaints reporting requirements.

This has practical systems implications. DPC firms should review whether their current checkout, loan origination, servicing and collections platforms can capture agreement-level data in a format capable of supporting FCA reporting.

The FCA authorisation process for DPC lenders

Step 1: Confirm whether your model is in scope

Start with a perimeter review. The firm should confirm whether it is a third-party DPC lender, whether the merchant and supplier structure brings the agreement into regulation, whether any exclusions apply, and whether existing consumer credit permissions are sufficient.

Firms that already hold the relevant consumer credit lending permissions can enter into regulated DPC agreements after Regulation Day, subject to any limitation or requirement already attached to their permission.

Step 2: Decide whether TPR is available

TPR is only available to eligible firms. The main criteria are that the firm was carrying on DPC activity on 15 July 2025, has made the necessary notification, and has paid the relevant fee. Firms that were not carrying on DPC activity on 15 July 2025, or do not plan to continue DPC activity after Regulation Day, do not need to register for TPR.

Temporary permission is not a long-term operating model. Firms in the TPR will need to apply for full authorisation before the end of the six-month window following Regulation Day.

Step 3: Prepare the authorisation application

DPC authorisation will sit within the consumer credit authorisation framework. For consumer credit lenders, the FCA expects an application form, regulatory business plan, financial forecasts and other supporting material relevant to the firm’s activities, all submitted through Connect.

Common supporting documents include a regulatory business plan, financial forecasts, Consumer Duty material, vulnerable customer policy, complaints policy, compliance monitoring plan, financial promotions policy, financial crime policy, outsourcing policy, senior manager CVs and DBS checks. Where the firm offers its own finance, the FCA may also expect a conduct risk framework, technology, cyber and resilience material, credit risk and affordability procedures, arrears and forbearance procedures, and copies of credit or hire agreements.

Step 4: Make the application through Connect

Connect is the FCA’s online system for authorisation applications and notifications. After submission, the FCA assigns a case officer, assesses whether the business meets and will continue to meet the minimum standards, checks the application against information held by other regulatory agencies in the UK or overseas, and then makes a decision.

Step 5: Budget for FCA fees

The FCA’s Handbook Notice states that most DPC firms are already authorised for other consumer credit activities and will only need a variation of permission, currently £550 for a full-permission consumer credit firm. Lenders that exclusively provide DPC will need authorisation.

The same notice states that the FCA proposed a Category 5 application fee for DPC authorisation and a Category 1 registration fee for firms entering TPR. The FCA’s application fees page currently lists Category 1 as £280, Category 2 as £550, and Category 5 as £5,580. Consumer credit full-permission applications are Category 3, 5 or 6 depending on the permission, while limited-permission consumer credit applications are Category 2.

Common DPC authorisation risks

The biggest risk is treating DPC regulation as a form-filling exercise. FCA authorisation is likely to test whether a firm is operationally ready for regulation, not only whether it has selected the correct permission. The FCA’s sample business plan guidance says a good regulatory business plan helps show that the firm is “ready, willing and organised” to be authorised.

From an authorisation-readiness perspective, the main risk areas are likely to be creditworthiness, customer understanding, Consumer Duty, arrears support, complaints handling, regulatory reporting and operational resilience. Firms that cannot evidence how these areas work in practice may find the authorisation process more difficult than expected.

How RR Compliance can help

DPC regulation gives lenders, fintechs, retail finance providers and BNPL platforms a short implementation window. RR Compliance can support firms with perimeter analysis, TPR planning, FCA authorisation or variation of permission applications, regulatory business plans, Consumer Duty evidence, creditworthiness frameworks, policies and FCA-ready compliance documentation.

Need help preparing for FCA DPC regulation? Contact RR Compliance to assess your authorisation route and build a practical plan before the FCA deadline.