FCA withdraws BNPL adverts emphasising benefits without disclosing risks

The Financial Conduct Authority intervened in August 2022 against buy now pay later advertising that emphasised the benefits of the products without sufficiently disclosing the relevant risks, according to an impact assessment published by HM Treasury on 19 May 2025¹. The document records the action as an example of the regulator's use of its powers over financial promotions, and states that the FCA last used those powers in October 2023 against two BNPL firms¹.

The same assessment sets out the scale of the market the adverts related to. According to FCA data, around 14 million UK adults used BNPL products in the six months to January 2023, equivalent to 27 per cent of UK adults, and the average outstanding balance of a current user in that period was £236¹. The total value of BNPL transactions rose from £6.4bn in the 12 months to March 2022 to at least £9.6bn in the 12 months to March 2023¹.

The Treasury document describes BNPL as "a type of interest-free instalment credit that allows borrowers to divide the cost of purchases into regular payments over a period not exceeding 12 months"¹. Such agreements currently fall within an exemption in article 60F(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, which covers fixed-sum credit repaid in no more than 12 payments within 12 months or less, provided without interest or charges¹. Firms offering only these agreements do not need to be authorised or regulated by the FCA and are not under the jurisdiction of the Financial Ombudsman Service¹.

The assessment cites research identifying risks for consumers including misleading promotions, a lack of affordability assessments and the possibility of high indebtedness¹. It states that 44 per cent of frequent BNPL users are over-indebted, citing the FCA's Financial Lives 2022 survey, that a Money and Pensions Service survey found 14 per cent of BNPL users had paid a late fee, and that 19 per cent of users of fee-charging providers were unaware of the fees¹. It also reports that 38 per cent of users spent more than they planned because BNPL was available at checkout, and that almost a third of users surveyed in November 2023 had borrowed from elsewhere to pay off BNPL debts in the previous 12 months¹.

Why it matters for households

The August 2022 action concerned advertising rather than the terms of BNPL agreements themselves, so it did not change what borrowers owe or when payments fall due. What it affected was the marketing consumers see at the point of sale. The Treasury assessment records that 38 per cent of BNPL users spent more than they planned because the option was available at checkout, and that 19 per cent of users of fee-charging providers did not know about the fees¹. Adverts that set out risks alongside benefits bear directly on those figures.

The wider regulatory position is unchanged for now. BNPL agreements within the article 60F(2) exemption remain outside FCA authorisation and outside the Financial Ombudsman Service, so users do not have the same protections as users of regulated credit such as credit cards and personal loans¹. The government's stated intention is to bring BNPL under FCA regulation, with affordability assessments, access to the ombudsman and rights under section 75 of the Consumer Credit Act¹. The assessment gives the number of UK adults using BNPL as around 14 million in the six months to January 2023¹.

What happens next

The impact assessment, signed by the responsible minister on 28 April 2025, states that regulation is set to come into force twelve months and one day after the secondary legislation is made¹. It says a levy on firms will commence when the amended framework takes effect, expected in April 2026, and that the government proposes to review the legislative provisions and publish a report at least every five years, with a review date of Q3 2030¹. The document records that legislation was not introduced before Parliament was dissolved in May 2024¹. The FCA's detailed rules for the regime have not yet been designed, and the assessment states the FCA will carry out a cost benefit analysis on them¹.

For how the current rules treat these products, see Is buy now pay later regulated by the FCA? and Financial adverts: what they must tell you. Background on the main providers is in Buy now pay later providers: Klarna, Clearpay, PayPal and how BNPL works, and on how the regulator acts against firms in How the FCA acts against firms: fines, bans and compensation orders.