Regulating Buy Now Pay Later (BNPL)

Who this applies to

DPC agreements provided by third-party lenders will become regulated credit agreements. This means that a DPC agreement will be regulated where:

• The lender and the supplier of goods or services are not the same person.
• There is an arrangement between a merchant and a lender, so that the lender becomes the legal supplier of goods and services to the customer.

DPC agreements provided by third-party lenders will not be regulated where they are:

• Used to finance premiums under contracts of insurance.
• Funding employee borrowing.
• Provided by registered social landlords to their tenants, leaseholders or, in Scotland, the shared owner under a shared ownership agreement to finance the provision of goods and services.
• Entered into before regulation day.  

The Government has decided that broking of DPC agreements will be exempt from regulation.

What firms need to do now

From regulation day onwards, any DPC lender who enters into a DPC agreement will need to:  

• Be authorised for the relevant consumer credit activities or have a temporary permission under the DPC temporary permissions regime (TPR).  
• Comply with our rules.  

Any DPC agreements entered into before regulation day will remain exempt.

If you think this will affect your firm, you should start preparing for regulation now. You should consider the proposals that we’ve set out in our Consultation Paper (CP) and begin thinking about what changes you may need to make to your business. We welcome feedback to our CP.

What firms need to do later

If your firm doesn’t currently hold the relevant consumer credit permissions, you’ll be able to enter the TPR. The TPR will allow you to continue operating on and after regulation day while we consider your application for the necessary permissions.  

If you choose not to enter the TPR, you must stop any DPC activities that will be subject to regulation by regulation day.

Firms that aren’t authorised or do not have a temporary permission will continue to be able to service DPC agreements that were taken out before regulation day. Those agreements will remain exempt.

Entering the temporary permissions regime

To enter the TPR, you’ll need to notify us. Your firm will only be able to enter the TPR where it meets all the following criteria. You:

• Are carrying on a DPC activity (which will become a regulated activity on regulation day) on 15 July 2025 (the initial commencement date of the Government’s legislation).
• Have notified us before regulation day.
• Have paid the relevant registration fee (which we’ll consult on in a future consultation).

You’ll be able to submit a notification for registration for the TPR 2 months before regulation day.

Notification for registration for the TPR will close 2 weeks before regulation day. We will publish more information, including the dates on which the notification period will open and close, in due course.

When notifying us, you’ll need to provide:

• Evidence that you were carrying on DPC lending on 15 July 2025.
• Your firm's details, including your registered office, principal place of business and any trading names.
• Details of your firm’s controllers and senior managers.

Our aims for regulation

We want our regulatory regime for DPC to reduce the risks of harm to consumers. We want to be proportionate, so that the DPC market can continue to innovate and grow sustainably, and that consumers can still access DPC where appropriate.

We want DPC firms to operate to high standards and deliver good outcomes for consumers. As part of that, our proposed approach to regulation seeks to ensure that DPC lenders:  

• Give information to consumers that helps them make effective, timely and informed decisions about their DPC borrowing, both before they enter into an agreement and throughout its duration.
• Lend responsibly and affordably.
• Support customers who are facing financial difficulty.  

We also want better, more timely information about the DPC market and customer outcomes so that we can supervise firms effectively. Our proposals therefore include requirements for fully authorised firms to provide us with product sales data about their DPC lending.