Regulatory AlertsUnited Kingdom: lending & credit regulation
RegulatedFCA regulates consumer credit; BNPL regulation extends to unregulated deferred payment credit
- Lead regulator
- Financial Conduct Authority
- Also involved
- Prudential Regulation Authority (mortgages) · Information Commissioner's Office (data)
- Core law
- Financial Services and Markets Act 2000
- Entry capital
- None
- Approval timeline
- 3-6 months
- Customer assets
- Segregated or held in trust
- Data protection
- UK GDPR and Data Protection Act 2018 · ICO
- Sandbox
- Yes - FCA Regulatory Sandbox
The UK strictly regulates consumer credit and mortgage lending under the FCA. The regulatory perimeter has expanded significantly to include previously unregulated Buy Now Pay Later (BNPL) services. SME lending remains largely unregulated unless it involves consumer protection elements. The FCA enforces strict affordability and conduct rules.
Which licence do you need?
| Your activity | Requirement | Capital | Timeline | Authority |
|---|---|---|---|---|
| Consumer lending | LicenceFCA Authorisation (Consumer Credit)[1][2] Requires FCA permission under FSMA 2000 | — | — | Financial Conduct Authority |
| SME / commercial lending | Unregulated Commercial lending generally exempt from FCA consumer credit rules | — | — | — |
| Microfinance | LicenceFCA Authorisation (Consumer Credit)[1] Subject to same rules as consumer credit if provided to individuals | — | — | Financial Conduct Authority |
| Buy-now-pay-later | LicenceFCA Authorisation (Deferred Payment Credit)[2] Newly regulated under PS26/1 for deferred payment credit | — | — | Financial Conduct Authority |
| P2P lending platform | LicenceFCA Authorisation (P2P Agreement Maker/Administrator) Requires specific P2P permissions under FSMA | — | — | Financial Conduct Authority |
| Credit bureau / scoring | Uncertain[3]verify with regulator Scoring itself unregulated; data sharing subject to CP26/7 | — | — | — |
| Debt collection | LicenceFCA Authorisation (Debt Management)[4] Debt management and debt adjusting require FCA permission | — | — | Financial Conduct Authority |
New — what changed recently
- 2026-04-27CP26/15: Reviewing the financial promotions rules for consumer credit — FCA consults on reviewing financial promotions rules for consumer credit to ensure consumer protection.[1]
- 2025-07-16PS26/1: Regulation of Deferred Payment Credit (unregulated Buy Now Pay Later) — FCA and PRA establish a new regulatory framework for unregulated Buy Now Pay Later services.[2]
- 2025-06-24FS25/6: Mortgage Rule Review: Feedback to DP25/2 and Roadmap — FCA provides feedback on mortgage rule simplification and sets out a roadmap for future changes.[5]
Market-entry checklist
- 1Apply for FCA AuthorisationSubmit an application for permission under the Financial Services and Markets Act 2000.
- 2Demonstrate Compliance with CONCEnsure adherence to the Consumer Credit sourcebook regarding affordability and conduct.
- 3Register with ICO for DataRegister as a data controller with the Information Commissioner's Office under UK GDPR.
- 4Implement BNPL RulesIf offering BNPL, comply with new deferred payment credit regulations under PS26/1.
- 5Establish Complaint HandlingSet up robust procedures for handling consumer complaints, especially for motor finance.
Sources
- CP26/15: Reviewing the financial promotions rules for consumer credit · 2026-06-17
- PS26/1: Regulation of Deferred Payment Credit (unregulated Buy Now Pay Later): Feedback to CP25/23 and final rules · 2025-07-16
- CP26/7: Credit Information Market Study: Proposed Approach to Implementing FCA Remedies · 2026-02-20
- CP21/30: Debt packagers: proposals for new rules · 2021-12-22
- Mortgage Rule Review: Feedback to DP25/2 and Roadmap · 2025-06-24