Unregulated Buy Now Pay Later (BNPL) firms becoming authorised

Prior to the UK leaving the EU, EEA-based firms were able to operate in the UK without our direct authorisation.

The Temporary Permissions Regime, which allowed EEA firms to continue to operate in the UK while transitioning to the full UK regulatory regime, is coming to an end after 3 years. We are assessing the last of the firms in the regime for full authorisation, including some firms that offer regulated lending products, but also offer unregulated Buy Now Pay Later (BNPL) products.

Which products and services fall under our remit is decided by the Government with Parliamentary approval. At the moment, exempt BNPL products have not been brought under our regulation.

While BNPL products can provide a useful way to spread the cost of a purchase for some people, it's important that consumers are aware that many BNPL products remain unregulated.

This means that firms, even if they are regulated by us for some of the products and services they offer, are not required to ensure that exempt BNPL products meet our rules, such as checking that a customer can afford to repay the loan. These customers also have fewer rights and protections and for example, are unable to bring a complaint to the Financial Ombudsman Service if something goes wrong.

What it means to be authorised for regulated lending

Being authorised for regulated lending means that the FCA has assessed a firm’s approach to ensuring interest bearing loans are affordable for consumers and that firms are offering suitable forbearance to consumers in financial difficulty. Amongst other things, firms are required to demonstrate their approach to dealing with vulnerable customers and how their products comply with the Consumer Duty.

If a consumer is not happy with a product or the service they receive they can complain to the firm. If this does not resolve the issue then they can refer their complaint to the Financial Ombudsman.

You can check whether a firm is authorised by us and the permissions they have on the FCA Register.