BNPL regulation confirmed: what it means for consumers and lenders

Scope of regulation

The new rules will apply specifically to BNPL agreements offered by third-party lenders. BNPL products provided directly by merchants will continue to be exempt under current rules, although the government has committed to monitoring this area closely for any signs of consumer harm.

Stronger consumer protections

Users of BNPL products will gain many of the rights already available to users of other credit products, including:

• The right to escalate complaints to the Financial Ombudsman Service.
• Protection under Section 75 of the Consumer Credit Act, making lenders jointly liable for purchases alongside the merchant.

Tailored FCA rules

The FCA will have a year from the new law being passed to develop and finalise specific rules for the BNPL sector. These rules will reflect the unique nature of BNPL products and will replace some older provisions from the Consumer Credit Act with more targeted, modern protections.

When will it happen?

The new regulatory framework is expected to take effect in mid-2026, giving lenders time to adapt and the FCA time to consult and prepare detailed guidance.

Who will this affect?

Over 10 million people currently using BNPL services stand to benefit. The upcoming rules aim to curb unaffordable borrowing and provide families with clearer protections, helping them better manage their finances.

Why does it matter?

BNPL usage has surged in recent years, and this move brings long-awaited oversight to a fast-growing part of the credit market. By aligning BNPL with traditional credit regulation, the government aims to ensure borrowers get the clarity and safeguards they need when spreading the cost of purchases.

arum can help

Our collections and recoveries practitioners have decades of experience helping firms to remain compliant with all relevant regulations, and are perfectly placed to help you prepare for the upcoming BNPL regulations.