Buy now, pay later – the final furlong… PS26/1 on the regulation of deferred payment credit published 

The legislation to bring DPC into the regulatory fold was published back in July 2025, and from 15 July this year, a market - that grew from £0.06 billion in 2017 to over £13 billion in 2024 - will be brought firmly inside the UK regulatory perimeter. As anticipated, there are no significant changes to the draft rules and guidance set out in CP25/23. That said, there have been a few revisions, which the FCA refers to as “minor amendments”, to ensure the rules work as intended.

So – what are those changes?

• Key product information 

In good news, the requirements for information firms must proactively give to consumers before they enter a DPC agreement (known as key product information, or KPI) have been reduced. This change aims to avoid consumer information overload, which the FCA acknowledges can actually reduce a customer’s ability to make a decision.

Gone are the KPI requirements to set out withdrawal, cancellation or early repayment rights. Gone too are the KPI requirements to include details of the consumer’s right to refer a complaint to the Financial Ombudsman Service (FOS), and to provide an adequate explanation of what a continuous payment authority is, and how it works. 

These elements have not disappeared completely however, and they now form part of the "additional product information" which firms must either give or make available to consumers before the agreement is entered into.  And where the FCA giveth, the FCA taketh away, so there is a new requirement that the KPI must highlight to customers that information about certain rights is set out in the additional product information. 

• Credit reference agency disclosure

The FCA has amended the KPI requirement concerning credit reference agencies (CRAs) to require firms to indicate whether they will (if known), or may, obtain information from a CRA before deciding whether to proceed with an agreement. This recognises that lenders may not know whether a CRA check will be required as part of the creditworthiness assessment at the point when the KPI is provided.

• Missed payment communications

Helpfully, the FCA has clarified that communications about missed payments do not necessarily need to explain all potential future adverse consequences. Instead, sufficient information about any adverse consequences arising from the missed payment, and any other adverse consequences that the firm considers are likely to arise, must be provided.  It may be, in practical terms, that firms already subject to the FCA handbook requirements in the Consumer Credit sourcebook (the CONC rules) will simply adopt the existing provisions as regards missed payments in that respect.

• Debt advice signposting

Firms must signpost borrowers to free and impartial money guidance and debt advice, and effectively communicate the potential benefits of accessing it, when giving a customer in arrears notice before terminating a DPC agreement or taking enforcement action. The FCA considers that consumers are likely to be in financial difficulty by the time a firm intends to take these actions, and those who access debt advice are likely to get better outcomes.  The wording mirrors that already provided for in the CONC rules for other regulated credit. Guarantor notifications

Another change is that DPC lenders will not be required to notify a guarantor when a borrower has missed a payment under a DPC agreement. This was an odd requirement in any event, and out of step with the requirements for other regulated credit.  As the policy statement acknowledges, there is no requirement under the Consumer Credit Act 1974 for lenders to provide a guarantor with notices of sums in arrears, or notices of default sums.  This appears to be a welcome change, but as it is not immediately obvious where to find evidence of guarantor loans being material in the DPC context, so it is possibly more of academic interest than anything else at this stage. Of course, the market can change; so maybe it is sensible future proofing in that respect. 

• FOS voluntary jurisdiction

Contrary to the consultation proposals, the FOS has decided not to make its voluntary jurisdiction available for DPC activities. This means the voluntary jurisdiction will not cover complaints relating to the provision of DPC before regulation came into force, nor complaints about DPC activities carried out from an EEA or Gibraltar establishment. 

Towards 15 July

It would be remiss to have any article on DPC without referring to the consumer duty.  By its very nature, DPC falls squarely within the protective embrace of Principle 12 - particularly in respect of the consumer understanding and consumer support outcomes – and DPC lenders who are not already authorised will need to ensure that they are fully compliant with the consumer duty in a little over five months’ time. 

There was clearly significant engagement on the proposals to apply the existing CONC creditworthiness rules to DPC lending, but it is perhaps unsurprising that there are no changes there. DPC lenders will need to undertake a creditworthiness assessment for each DPC transaction. In the FCA’s view the proportionate and principles-based nature of the rules allows lenders sufficient flexibility to tailor those assessments, which apply to all DPC agreements, including those below £50. 

Firms that were carrying on DPC activity as of 15 July 2025, and who do not currently hold the necessary consumer credit permissions, will be eligible to enter a Temporary Permissions Regime (TPR). The notification window for TPR registration will open on 15 May 2026 and close on 1 July 2026.  Firms in the TPR will have a 6-month window following 15 July 2026 to apply for full authorisation. 

So, in summary, we are almost there!  The meaning of the word “urgent” has possibly been tested to its limits, but patience is its own reward – although those lenders now facing the brave new world as FCA-regulated firms may not consider reward to be the mot juste.