How BNPL Regulation Is Creating New Opportunities for UK Lenders
With BNPL regulation reshaping the UK market, lenders have a new opportunity to improve risk visibility and unlock smarter credit decisions.
What BNPL Regulation Means for UK Lenders
After years of explosive growth, on 15 July 2026, the UK’s Buy Now, Pay Later (BNPL) market will enter a new chapter, officially coming under Financial Conduct Authority (FCA) regulation. Deferred Payment Credit (DPC), commonly known as BNPL, will soon experience a number of significant changes including:
Here, we’ll explore the upcoming changes to the BNPL market and how it provides opportunities for portfolio expansion for UK lenders.
Adoption has been particularly strong among younger consumers. Nearly three-quarters (73%) of millennials have used BNPL products, while usage among Generation Z is similarly high (65%).4 As BNPL becomes a mainstream payment and financing option, regulators have increasingly focused on ensuring consumers receive appropriate protections and lenders have sufficient visibility into borrowing behaviour.
- Greater oversight
- Affordability requirements
- Increased consumer protections
Here, we’ll explore the upcoming changes to the BNPL market and how it provides opportunities for portfolio expansion for UK lenders.
Regulation Reflects BNPL's Rapid Growth
The FCA's move comes as BNPL usage continues to expand across the UK. Today, 42% of UK adults—approximately 22.6 million consumers—have used BNPL services, up from 36% in 2023.1, 2 Meanwhile, the market is projected to grow from £29.85 billion in 2024 to nearly £47 billion by 2029.3Adoption has been particularly strong among younger consumers. Nearly three-quarters (73%) of millennials have used BNPL products, while usage among Generation Z is similarly high (65%).4 As BNPL becomes a mainstream payment and financing option, regulators have increasingly focused on ensuring consumers receive appropriate protections and lenders have sufficient visibility into borrowing behaviour.
What Will Change Under FCA BNPL Regulations?
After the FCA begins regulating Deferred Payment Credit, the new framework will require BNPL providers to:- Obtain full FCA authorisation to operate
- Conduct proportionate affordability and creditworthiness assessments before approving a BNPL agreement
- Provide shoppers with transparent, upfront details regarding repayment obligations and fees
- Follow FCA Consumer Duty requirements, Consumer Credit Sourcebook (CONC) rules for arrears and forbearance and the Breathing Space (Debt Respite) Scheme for debtor’s temporary protection
- Give access to complaint resolution through the Financial Ombudsman Service, under Section 75 of the Consumer Credit Act
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What Does This Mean for Lenders?
Historically, BNPL obligations have existed outside the traditional credit ecosystem. As a result, lenders evaluating applicants for credit or other financial products may not have had a complete picture of a consumer's financial health. Now, as BNPL reporting becomes more standardised, lenders will gain a clearer view of an applicant's total debt exposure—supporting potentially more accurate credit decisioning and helping reduce the risk associated with hidden borrowing activity.The new requirements may also help curb loan stacking, where consumers overextend themselves across multiple providers. Mandatory affordability checks may reduce this practice and potentially improve repayment performance across the broader credit market.
At the same time, regulated BNPL data creates new opportunities for financial inclusion. Many consumers—particularly younger borrowers and those with thin credit files—have established repayment histories through BNPL products despite limited traditional credit activity. Incorporating these behaviours into credit assessments can help lenders more accurately evaluate risk while expanding access to credit.
LexisNexis® RiskView™ UK Prepares Lenders for This Moment
For many lenders, incorporating BNPL data will require updates to existing models and risk strategies. The challenge is not just gaining access to new data, but also understanding how to use it effectively.LexisNexis® RiskView™ UK has long integrated alternative data, including BNPL insights, into its risk assessment framework. With more than 750 predictive attributes, over 30 consumer datasets totaling nearly 2.7 billion active records and more than 57 million LexIDs®, the solution provides lenders with a broader view of consumer creditworthiness than traditional approaches alone.
Because LexisNexis® RiskView™ UK has incorporated alternative data for years, its predictive models already account for these behaviours within a proven analytical framework. So, lenders may adapt more quickly as BNPL regulation reshapes the market.
Looking Ahead
The FCA's regulation of BNPL represents a shift toward greater transparency across the UK credit landscape. Lenders who can effectively incorporate BNPL and alternative data into their credit strategies may be better positioned to reduce risk and improve portfolio performance by identifying creditworthy consumers who may have been overlooked by traditional models.Learn more about how LexisNexis® RiskView™ UK can help strengthen your credit decisions and prepare for the next era of consumer lending.
SOURCES:
1 FCA, Financial Lives 2024 Survey.
2 Finder UK, January 2025 Survey.
3 FCA Occasional Paper 2025.
4 Finder UK, “Buy now, pay later (BNPL) statistics.” February 2026.
This article is for educational purposes only and does not guarantee the functionality or features of LexisNexis products identified.
LexisNexis does not warrant this article is complete or error-free.
LexisNexis does not warrant this article is complete or error-free.