Fintech, digital assets, payments, and consumer credit: Outlook on UK Regulatory Landscape in July 2025
UK Set to Regulate Buy-Now-Pay-Later Products
The UK government is moving forward with the regulation of Buy-Now-Pay-Later (BNPL) products, with the Financial Conduct Authority (FCA) publishing a consultation paper outlining its proposed regime for regulating these products on July 18, 2025.
Regulatory Framework
The new regulatory regime, now referred to as "Deferred Payment Credit" (DPC), will take effect from July 15, 2026. A Temporary Permissions Regime (TPR) will be available for firms that do not currently hold the necessary permissions.
Key Regulatory Proposals
Under the new regulations, BNPL providers will be required to give clear and accessible information about the risks involved in using their services. Firms will also be required to conduct affordability checks on shoppers before extending credit, with these checks being mandatory for every purchase, though less stringent for small, repeated transactions.
Purchases made using BNPL will be eligible for Section 75 protection, similar to credit cards, making BNPL providers jointly liable with retailers for purchases between £100 and £30,000. Consumers will have the right to escalate complaints to the Financial Ombudsman Service if not resolved satisfactorily by the provider. Firms must also contact consumers immediately upon missed repayments, explain the consequences, and offer support for financial difficulties.
Impact on Industry and Consumers
The forthcoming regulation aims to enhance consumer protection and ensure that BNPL providers operate transparently and responsibly. It marks a significant shift from the previously light regulation of BNPL products, offering consumers greater protections while placing more responsibility on providers to ensure affordability and fair practices.
Other Regulatory Developments
In parallel developments, the European Commission adopted legislative proposals for PSD3 and PSR in June 2023, and the European Parliament adopted its position at first reading on the proposals in April 2024. The Financial Conduct Authority (FCA) published a revised version of the memorandum of understanding between it, the Bank of England, the Payment Systems Regulator, and the Prudential Regulation Authority on June 24, 2025.
The proposed changes in PSD3 and PSR include bringing electronic communications service providers under fraud prevention, requiring ATM transactions to show all fees and exchange rates, and introducing safeguards for innovative payment methods. The FCA has also identified several areas of improvement for firms' risk management frameworks, including inadequate enterprise-wide risk management frameworks, immature liquidity risk management, and inadequate consideration of group risk.
The regulatory outlook for various areas, including fintech, digital assets, payments, and consumer credit, is regularly updated by our firm. The latest update provides high level summaries of important forthcoming regulatory developments in these areas.
[1] Financial Conduct Authority, "Consultation Paper 23/25: Deferred Payment Credit: Regulating Buy Now Pay Later," July 18, 2025, link
[2] HM Treasury, "Regulation of Buy Now Pay Later: Consultation Response," June 16, 2025, link
[3] HM Treasury, "Regulation of Buy Now Pay Later: Policy Statement," June 16, 2025, link
- The UK's new regulatory framework for financial products, called Deferred Payment Credit (DPC), will affect the business operations of Buy-Now-Pay-Later (BNPL) providers.
- The DPC regulations will require BNPL providers to provide clear and accessible information about the risks involved in using their services, while also conducting affordability checks on shoppers.
- BNPL providers will be jointly liable with retailers for purchases between £100 and £30,000, thanks to Section 75 protection, similar to credit cards.
- The regulation of BNPL products in the UK marks a shift towards enhanced consumer protection, and aims to ensure transparency and responsible operations from providers.
- Other developing regulatory matters, such as PSD3, PSR, and fintech, are regularly monitored by our firm, offering insights into important forthcoming changes in these areas.
- The impact of these regulatory developments in personal-finance, technology, entertainment, general-news, sports, education-and-self-development, and even casino-and-gambling sectors may be significant, influencing the investing landscape and lifestyle of consumers.
