As BNPL’s popularity increases, regulatory bodies across the globe are introducing stricter legislation to protect consumer interests and promote responsible use. The UK has proved to be no exception. In May 2025, the government announced plans to bring the country’s fast-growing BNPL market under the direct supervision of the FCA.
Ultimately, these regulatory changes are set to reshape credit and collections in the UK. Providers will need to prepare to overhaul their compliance processes, upgrade technology, and rethink customer engagement to meet these new standards.
This article explores what’s changing, why it matters, and how technology helps organizations get ahead of the regulatory curve. Let’s get started.
BNPL is a staple in the UK’s retail landscape. Over 10 million consumers use these convenient, interest-free installment loans to manage everyday purchases.
Until now, this fast-growing sector has operated largely outside the regulatory framework applied to traditional credit products. But rising concerns about financial distress have prompted the UK government to act.
The proposed legislation will treat BNPL products like credit cards and personal loans. Third-party providers will be required to get FCA authorization and comply with strict standards for affordability, transparency, and consumer protection moving forward.
While merchant-provided BNPL (where the retailer extends credit directly) remains exempt for now, the government has made it clear that this could change in the future.
The new regime is slotted to introduce a suite of core requirements for BNPL providers. Here’s a quick breakdown of what to expect:
Providers will need to deliver clear, timely, and accessible information about BNPL products to their customers. Disclosures must be standardized and easy to understand so consumers know exactly what they’re signing up for.
Before approving a BNPL transaction, providers need to assess a customer’s ability to repay by analyzing income, expenses, existing debts, and other relevant factors.
All marketing and promotions must be fair, clear, and easy to understand to reduce the risk of encouraging consumers into entering unsuitable credit agreements.
Customers will have the right to escalate complaints to the Financial Ombudsman Service. Providers need a clear process for handling complaints, so consumers get redress quickly and efficiently.
Providers will also be subject to ongoing FCA supervision. This will likely include regular reporting, audits, and the risk of enforcement action for non-compliance.
This new framework was presented to Parliament in May 2025. Over the next 12 months, the FCA will have the opportunity to draft, consult, and finalize these rules.
It’s expected that BNPL products will enter regulation in mid-2026. The proposal calls for a Temporary Permissions Regime to make the transition as smooth as possible.
The UK isn’t alone in tightening BNPL oversight. In fact, similar regulatory trends are unfolding around the world, from Australia to Singapore to New Zealand.
The table below outlines some of these key changes in more detail:
|
Country/Region |
Key Regulatory Changes |
Implementation Date |
|
Australia |
BNPL providers required to hold an Australian Credit License and comply with the National Credit Code. New rules mandate responsible lending checks, clear pre-contract disclosures, price controls, and more. |
June 2025 |
|
New Zealand |
BNPL contracts regulated under the Credit Contracts and Consumer Finance Act, with requirements for certification, disclosure, and responsible lending. |
2022–2023 |
|
Singapore |
BNPL Code of Conduct requires providers to meet standards for risk management, transparency, and consumer protection. Accreditation is now mandatory for all major BNPL players. |
2023 |
|
European Union |
Revised Consumer Credit Directive (CCD II) brings BNPL under credit product regulations, requiring creditworthiness assessments and stricter lending standards. |
By 2026 |
Even the state of New York recently passed legislation to introduce a state-level licensing regime for BNPL providers.
Ultimately, this global momentum signals a clear path forward. Across the globe, BNPL providers need to prepare for higher standards and increased regulatory scrutiny.
So, how can organizations prepare for this new regulatory landscape?
Manual processes and legacy systems are struggling to keep pace with the evolving complexity of regulatory requirements. As regulations change, organizations are increasingly turning to technology solutions that offer flexibility, configurability, and the ability to adapt in real time.
Decision engines are a key component in this shift. By using pre-defined rules, these systems automate decision-making processes from end to end. For BNPL providers, these advanced solutions support compliance with changing regulations while maintaining the speed and agility that customers expect.
Let’s explore how decision engines are helping industry leaders respond to the latest regulatory requirements for BNPL products:
A decision engine can automate the delivery of standardized, compliant disclosures at every stage of the customer journey. By integrating with digital channels, it ensures every customer receives clear, up-to-date information about products and services.
Decision engines use real-time data analysis, AI, and machine learning to evaluate a customer’s ability to repay. They instantly gather and evaluate income, expenses, and credit history, so every transaction meets regulatory standards for responsible lending.
Technology can enforce approval workflows for all marketing materials, ensuring only compliant, FCA-approved content reaches consumers. Automated checks help prevent misleading promotions and streamline the approval process.
Decision engines can track and manage complaints. Automating escalation to the Financial Ombudsman Service supports timely resolution.
A decision engine generates detailed, audit-ready logs of every decision, making it easier to demonstrate compliance during FCA reviews.
The era of unregulated BNPL is coming to a close. In this new landscape, robust regulatory adherence is becoming a necessity for financial institutions.
FitLogic by C&R Software is engineered with a strong regulatory focus, integrating comprehensive compliance mechanisms into its credit decisioning rules engine. Drawing on over 40 years of expertise in credit and collections, FitLogic enables both business and technical users to author, test, and deploy decision strategies in real time, delivering a high level of user assurance in complex legal environments.
Key capabilities include:
FitLogic’s rules engine delivers the flexibility, agility, and operational confidence needed to maintain robust adherence to evolving BNPL regulations. This technology is designed to provide peace of mind for organizations facing the challenges of today’s regulatory landscape.
If you’d like to learn more about how C&R Software’s credit rules decisioning engine supports regulatory compliance, schedule a demo today.