Firms Should Already Be Preparing for FCA Authorisation
The countdown to buy now pay later regulation has begun!!
From July 2026, much of the UK’s BNPL market will move fully into the FCA regulatory perimeter. For firms currently offering, partnering on or planning to introduce BNPL products, this is not simply another regulatory update — it is a structural shift that will require FCA authorisation, governance overhaul and operational readiness.
And the key message for compliance professionals is simple: preparation should already be underway.
The window for preparation is shorter than it looks
While July 2026 may appear some distance away, the reality is that FCA authorisation exercises are rarely quick or straightforward.
Many BNPL providers, particularly those currently unregulated, will be entering the FCA authorisation process for the first time. Others will need to vary permissions, restructure governance or significantly upgrade affordability, complaints and oversight frameworks.
Even with temporary permissions expected to be available, firms should not assume this creates breathing space. FCA conduct expectations will apply from day one of regulation, and supervisory scrutiny is likely to be immediate.
Firms that delay preparation risk finding themselves under significant pressure once application windows open.
Authorisation will go far beyond form completion
Securing FCA authorisation for BNPL will not be a box-ticking exercise. The regulator will expect firms to demonstrate that they can operate to the standards of fully regulated consumer credit providers.
This means robust evidence across:
- governance and senior management oversight,
- affordability and creditworthiness assessments,
- Consumer Duty implementation,
- complaints and redress handling,
- vulnerability and customer support frameworks, and
- oversight of merchants, brokers and introducers.
For firms transitioning from unregulated models, this represents a step change in regulatory expectations.
The most successful applications will be those supported by clear governance, well-developed policies and demonstrable operational control — not those attempting to build frameworks during the application process.
Historic activity cannot be ignored
One of the most important areas for firms to consider now is historic activity.
Once authorised, BNPL firms should expect their pre-regulation lending and customer outcomes to come into scope of supervisory and complaints scrutiny. This includes affordability approaches, customer communications and historic complaints handling.
Compliance teams should already be asking:
- Are there legacy practices that could create future complaint risk?
- Do historic customer cohorts present potential remediation exposure?
- Can we evidence reasonable and proportionate decision-making?
Proactive review of historic activity will significantly reduce the risk of issues surfacing later through FOS complaints or FCA engagement.
Governance and Consumer Duty readiness
Consumer Duty will sit at the heart of BNPL regulation.
Firms will be expected to demonstrate fair value, clear communications, appropriate support for customers in difficulty and effective monitoring of outcomes. Importantly, the FCA will assess whether these frameworks are embedded operationally rather than existing purely on paper.
Boards and senior management should therefore be engaged now. Authorisation is not simply a compliance exercise — it is a business-wide readiness programme.
Why early action makes a difference
Experience across consumer credit authorisations shows that firms which start early move through the process more smoothly and with significantly less disruption.
Those who leave preparation late often face:
- rushed policy development,
- gaps in governance evidence,
- delays in application approval, and
- increased regulatory scrutiny.
With a large number of BNPL providers expected to enter the authorisation process around the same time, FCA capacity will also be a factor. Early, well-prepared applications are likely to progress far more efficiently.
How ALPH Legal & Compliance Can Support BNPL Firms
ALPH Legal & Compliance is already supporting firms preparing for BNPL regulation and authorisation.
Our support includes:
- full FCA authorisation and permissions strategy,
- pre-application readiness and gap analysis,
- policy and governance framework development,
- operational compliance and Consumer Duty reviews,
- historic lending and complaints risk assessments, and
- ongoing compliance oversight as regulation embeds.
Whether your firm is an existing BNPL provider, a lender entering the market or a broker working with BNPL partners, early structured preparation can significantly reduce regulatory risk and streamline the approval process.
With July 2026 approaching quickly, now is the time to act.
To discuss how ALPH can support your BNPL authorisation or readiness programme, visit our FCA Authorisation page or get in touch directly.