On 18 July 2025 the Financial Conduct Authority (FCA) published Consultation Paper CP25/23: Deferred Payment Credit (unregulated Buy Now Pay Later): Proposed approach to regulation (CP25/23).

Background

On 14 July 2025, the Government legislated to bring Deferred Payment Credit (DPC) lending under FCA regulation. DPC is a relatively new form of lending that allows for short-term zero-interest loans payable in 12 or fewer instalments, to be offered to consumers. It is currently exempt from regulation and lenders who only provide DPC do not currently need to be authorised by the FCA. However, from 15 July 2026 (Regulation Day), lenders who offer a DPC agreement to finance the purchase of goods or services from a merchant will come within FCA regulation. Merchants that offer their own DPC agreements directly will not.

Proposals

The FCA wants to introduce a proportionate regime, relying on the Consumer Duty where possible, rather than introducing new rules. Its proposals relate to various matters including:

  • Information requirements. The FCA’s proposals include new (i) rules to require DPC lenders to disclose certain information before a consumer takes out a DPC agreement (ii) rules requiring firms to communicate with a customer when they miss a DPC repayment, or when the lender intends to take certain action against them and (iii) guidance to remind firms of their obligations under the Consumer Duty.
  • Assessing creditworthiness. The FCA proposes to apply its existing principles‑based rules and guidance at CONC 5.2A.
  • Application of wider Handbook requirements. The Senior Managers and Certification Regime will apply to DPC firms, as well as sourcebooks including PRIN, COND and SYSC. Consumers will also have access to the Financial Ombudsman Service.

The proposed changes are in the draft Deferred Payment Credit Instrument 202X (Appendix 1 CP25/23).

TPR

The FCA is also proposing a Temporary Permissions Regime (TPR).

Lenders who want to continue to offer DPC from 15 July 2026 will either need to be authorised for the relevant consumer credit activities or have temporary permission. If not, they must stop their DPC activities that will be subject to regulation, although firms that are not authorised or do not have a temporary permission will continue to be able to service DPC agreements that were taken out prior to 15 July 2026.

Further information regarding the sequencing of the TPR can be found in chapter 6 of CP25/23.

Next Steps

The deadline for comments on CP25/23 is 26 September 2025.

The FCA plans to issue a Policy Statement with final rules in early 2026.