The headline reform is clear: From 15 July 2026, many forms of deferred payment credit (previously known as Buy Now, Pay Later or BNPL) will come fully under the Financial Conduct Authority’s (FCA) regulatory regime. Under the new framework, short-term, interest-free instalment plans offered at the checkout will be treated as regulated credit agreements. This will bring with it the full suite of regulatory expectations, from clearer pre-contract information and affordability assessments to access to the Financial Ombudsman Service (FOS).

For consumers, this should mean stronger rights and fairer outcomes – such as easier redress where goods are faulty or where disputes arise. For providers, it represents a significant compliance uplift, as systems, controls, and disclosures will all need to align with the FCA’s standards.

The reform responds to the rapid expansion of BNPL over recent years, alongside concerns that some consumers were accumulating unaffordable debt outside of the protections afforded to regulated credit cards or loans. The FCA’s intervention seeks to close this protection gap and promote consistency across credit markets.

The Government is moving ahead with the modernisation of the Consumer Credit Act 1974
CCA) – a complex and foundational piece of legislation that underpins our regulatory framework.

Phase 1 of reform, published as a consultation in May 2025, focuses on updating information requirements, sanctions, and criminal offences, signalling a move toward simplification and greater alignment with the FCA’s rulebook.

Phase 2, expected in early 2026, will take on the more substantive task of recasting consumer remedies and protections. This could reshape how statutory rights operate across products such as hire purchase, motor finance, and credit cards.

Given that the CCA forms the legal basis for Section 75 protections and other key consumer rights, the implications of transferring these powers into FCA rules will be closely watched by lenders, merchants, and consumer groups alike. It will be critical to ensure that smaller and specialist lenders have clarity on their obligations and that the transition does not create uncertainty or inconsistency in the market.

The Consumer Duty will continue to anchor the FCA’s supervisory agenda into 2026. The regulator has already confirmed further thematic reviews, updated guidance, and targeted communications for the year ahead.

A pilot programme in early 2026 will test more practical guidance for smaller consumer-finance firms, particularly around affordability, customer outcomes, and product governance. The FCA is also expected to tighten its focus on how firms identify and support vulnerable customers, ensuring that the Duty’s principles translate into tangible results.

For firms, the immediate priorities are already emerging. Contract terms, onboarding processes, and compliance frameworks for deferred payment credit will need to be revised well in advance of the July 2026 deadline.

Lenders must also prepare for stricter affordability checks, enhanced disclosure requirements, and more robust complaint-handling systems.

For consumers, the reforms should deliver clearer information, fairer treatment, and stronger redress routes. However, as firms adapt, there may be a period of adjustment where product terms, processes, and customer journeys evolve to meet the new standards.
Both the Government and FCA have indicated they will pursue staged implementation and ongoing engagement with industry to manage the transition effectively.

Even once these milestones are reached, reform of the UK consumer credit landscape will remain a work in progress. The CCA review could extend over several years, while the Consumer Duty continues to evolve as the central benchmark for good practice.

2026 will therefore be both a turning point and a starting point – the year that deferred payment credit becomes mainstream regulated credit, and the beginning of a broader modernisation of how consumer credit operates in the UK.