As Blue Monday marks the emotional low point of the year for many UK consumers, its financial counterpart is already emerging. Following heavy reliance on Buy Now, Pay Later (BNPL) and credit cards across Black Friday and Christmas 2025, UK lenders face a stacked-debt hangover that will surface through early 2026.
With BNPL entering FCA regulation by mid-2026, collections leaders must get ahead on affordability, vulnerability identification, and evidence of good customer outcomes — or risk rising arrears, conduct scrutiny, and performance drag.
Blue Monday and the financial reality behind it
Blue Monday is often framed as a cultural moment, but for lenders and collections teams it reflects something more tangible: the collision of emotional strain and financial pressure.
January is when:
- Festive optimism fades
- Energy bills rise
- Credit card balances begin accruing high APR interest
- BNPL instalments from November and December overlap
For many households, especially younger and lower-income cohorts, Blue Monday coincides with the first missed payments of the year. The result is not a single debt problem, but stacked obligations — multiple BNPL plans sitting alongside revolving credit.
Why UK consumers leaned into BNPL and credit cards over the holidays
Heading into Black Friday 2025, UK consumers were cautious. Barclays’ UK Consumer Spend Report showed essential card spending down year-on-year in October, flat discretionary spend, and weakening confidence ahead of the Autumn Budget. Many households delayed purchases, waiting for deeper discounts.
That restraint turned into highly concentrated, deal-driven spending:
- Two in five UK adults actively hunted Black Friday deals
- Younger cohorts showed heavy engagement with BNPL at checkout
- Flexible payment options increasingly displaced cards and digital wallets
BNPL’s appeal was clear:
- Budget smoothing without immediate interest (if paid on time)
- Frictionless integration at point of intent
- Higher basket sizes and conversion rates for merchants
Global data from Adobe, eMarketer and Payments trade outlets consistently shows record BNPL usage across Cyber Week. While some datasets reference Canada or the US, the behavioural mechanics are directly transferable to the UK, given shared platforms, merchants, and consumer psychology.
The regulatory horizon: BNPL enters the FCA perimeter in 2026
The UK is bringing BNPL (Deferred Payment Credit) into the FCA’s regulatory perimeter.
Following HM Treasury’s May 2025 consultation response, the FCA’s CP25/23 consultation outlines:
- Tailored CONC rules for BNPL
- Affordability and creditworthiness checks
- Alignment with Consumer Duty
- Access to the Financial Ombudsman Service
- A Temporary Permissions Regime ahead of expected go-live around July 2026
For collections and recoveries teams, this is not a box-ticking exercise.
It raises expectations around:
- Evidencing good customer outcomes
- Fair value treatments
- Vulnerability support
- Clear, sufficient information across the full customer journey — not just at origination
Stacked debt scenarios (multiple BNPL plans plus cards) will come under particular scrutiny, where treatment suitability must be demonstrably proportionate.
2026 risk outlook: the “stack” effect after Blue Monday
The highest-risk period is already visible.
From January to March:
- Credit card balances roll into high-APR cycles
- BNPL “pay-in-four” schedules overlap
- Cash-flow stress turns into arrears
US e-commerce data — often a leading indicator — shows Q4 debt spikes taking until the end of Q1 to normalise. The UK is likely to mirror this pattern due to aligned shopping calendars and payment behaviours.
Key risk signals for UK portfolios include:
- Younger customer skew among heavy BNPL users
- Higher incidence of simultaneous credit agreements
- Elevated vulnerability indicators
- Increased conduct risk under Consumer Duty
Collections strategies must differentiate temporary cash-flow disruption from persistent affordability issues, avoiding payment collisions and prioritising early, supportive engagement.
Four actions collections leaders should take now
- Run a collections excellence assessment
Baseline your current strategy, decisioning, channels, MI, QA and controls against best practice. Identify immediate quick wins — such as cadence changes to avoid due-date clustering — and define a 12–24 month roadmap aligned to BNPL regulation.
- Design stack-aware segmentation and journeys
Detect concurrent BNPL and card exposure. Separate cash-flow stress from affordability risk. Tailor plans using short-term breaks, spread arrangements, and vulnerability-led pathways, with communications aligned to customer reality.
- Upgrade technology and data foundations
Review decision engines, collections platforms, communications orchestration and analytics capability. Where re-platforming is required, take independent, evidence-based advice to avoid costly mistakes and accelerate time to value.
- Build a regulation-ready operating model
Refresh policy, MI, QA, training and dispute handling to meet incoming BNPL rules and the Consumer Duty evidence bar. Ensure auditable data lineage that demonstrates not just activity, but outcomes.
Arriving in 2026 strong
Blue Monday is a reminder that financial stress is not seasonal — it compounds.
As BNPL enters FCA regulation in 2026, affordability checks, fair value treatments and outcome evidence will matter as much as collections performance. Organisations that act now will protect both customers and P&L.
Arum partners with lenders and creditors to benchmark, redesign and re-platform collections operations, helping them arrive in 2026 with stack-aware strategies, regulation-ready operations and decisioning that delivers fair outcomes at scale.
We can deliver a collections excellence assessment and prioritised roadmap within weeks.
How we can help
Organisations don’t need to navigate this alone. Many benefit from an independent view of their current collections environment, from call listening and skills analysis to identifying gaps, strengthening processes and supporting training delivery.
With the right expertise behind them, teams can embed these behaviours quickly and confidently, creating lasting change for customers and the organisation.
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About the author
Stephen is Sales Director at Arum Global, leading financial services engagements across the UK and Canada. He brings extensive experience delivering complex solutions to major enterprises, having previously worked with clients such as Citi Bank, Lloyds Banking Group, Centrica, Chevron & Shell amongst other complex enterprise clients. Stephen combines deep industry knowledge with a consultative approach to drive transformation and measurable results.
Stephen Wright
Sales Director