Consultation published on a regulatory regime disapplying CCA information requirements for BNPL

The Government published an impact assessment on 19 May 2025 alongside the Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025, which brings interest-free buy now pay later agreements offered by third-party lenders into regulation under the Regulated Activities Order 2001¹. The instrument classifies BNPL agreements as regulated credit agreements under article 60B(3) of the RAO, and most provisions of the Consumer Credit Act 1974 relating to information disclosure are disapplied for them, allowing the FCA to write its own information rules².

The October 2024 consultation set out the Government's plan to disapply most of the CCA's information disclosure provisions for newly regulated BNPL agreements, replacing them with FCA rules². It ran for six weeks, included 13 questions and received 61 written responses². An earlier February 2023 consultation on applying almost the full provisions of the CCA to BNPL received 53 responses¹. Legislation was not enacted before Parliament was dissolved in May 2024¹.

The impact assessment puts the cost of the preferred option at £19.1m to £31.7m over a 10-year appraisal period, with a best estimate of £25.4m, and a net cost to business of £2.3m per year¹. Ten unauthorised firms are expected to pay a £5,440 authorisation fee each, with additional administrative costs of £2,441.25 to £4,068.75 per firm, and registering under the Temporary Permissions Regime costs a one-off £350 per firm¹. Annual FCA fees and levies for 20 identified firms are estimated at £8,585,697, and FOS case fees at £694,850¹. The Government states it cannot provide precise estimates of benefits given data limitations and uncertainty around FCA rules¹.

The exemption in article 60F(2) of the RAO applies to borrower-lender supplier agreements for fixed-sum credit with no more than 12 payments within 12 months and no interest or charges¹. The new instrument also introduces an exemption from article 36A of the RAO for credit broking, so most merchants referring customers to third-party BNPL providers do not need credit broking permission; this does not apply to domestic premises suppliers². The exemption spares businesses an FCA application fee of £540 for limited consumer credit permission as of April 2025².

Why it matters for households

Once the regime takes effect, lenders offering BNPL products must be authorised by the FCA, follow its rules on affordability assessments and provide clear product information². Borrowers gain access to the Financial Ombudsman Service and rights under section 75 of the CCA, which the explanatory memorandum says makes it easier to obtain refunds for issues such as faulty goods². The impact assessment states the levy will commence when the amended framework takes effect, expected in April 2026¹. The Government says it will review the legislative provisions and publish a report at least every five years, with a review date of Q3 2030¹.

What happens next

The instrument includes a statutory review clause in article 13². The impact assessment states regulation is set to come into force twelve months and one day after the secondary legislation is made¹. The FCA will conduct a cost benefit analysis on its new rules, which the impact assessment says are not yet designed¹.