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United Kingdom: lending & credit regulation

Regulated

UK consumer credit regulated by FCA under Consumer Credit Act 1974; BNPL regulation introduced 2025

Lead regulator:
Financial Conduct Authority
Key law:
Consumer Credit Act 1974
Last updated:
2026-07-12

Consumer credit activities in the UK are strictly regulated by the Financial Conduct Authority (FCA) under the Financial Services and Markets Act 2000 and the Consumer Credit Act 1974. All firms offering credit to consumers must be authorized by the FCA and comply with the Consumer Credit Sourcebook (CONC), which mandates fair treatment, affordability checks, and transparent pricing. The regulatory scope has expanded significantly in recent years to include previously unregulated sectors, such as Buy Now Pay Later (BNPL) services, which are now subject to full prudential and conduct regulation as of 2025. The FCA actively enforces restrictions on high-cost credit, persistent debt, and discretionary commission models to protect consumers from financial harm.

Who regulates

  • Financial Conduct Authority

    Primary conduct regulator for consumer credit, mortgages, and BNPL; sets rules on affordability, pricing, and complaint handling.

    [1][2][3][4]

  • Prudential Regulation Authority

    Prudential supervisor for banks and major credit providers; oversees mortgage lending stability and capital buffers.

    [5][3][6]

Core laws & rules

  • Consumer Credit Act 1974 (1974)

    The foundational statute governing consumer credit agreements, requiring FCA authorization for regulated activities and establishing consumer rights regarding defaults, cancellations, and advertising.

  • Financial Services and Markets Act 2000 (2000)

    The primary legislative framework under which the FCA operates, granting it the power to authorize firms and enforce conduct rules for consumer credit.

Licensing & registration

  • FCA Authorization for Consumer Credit

    Firms must be authorized by the FCA to enter into regulated consumer credit agreements, hire-purchase agreements, or provide credit brokerage. This includes traditional lenders, BNPL providers, and debt packagers.

    [3][7]

Restrictions & warnings

  • The FCA enforces strict affordability checks (CONC 5.2) and prohibits lending where the borrower cannot repay without default. Discretionary commission models in motor finance are banned, and a price cap applies to rent-to-own agreements.

    [4][8][9]

  • Firms must manage persistent debt in credit cards and store cards by intervening early, and BNPL providers are now subject to full regulatory oversight including financial promotions and complaint handling rules.

    [3][1]

Direction of travel

  • The FCA is actively reviewing financial promotions rules for consumer credit and implementing mandatory credit information sharing to improve market transparency. Regulatory focus remains on consumer protection in high-cost credit and ensuring fair treatment in motor finance and BNPL sectors.

    [1][2][10]

Sources

  1. CP26/15: Reviewing the financial promotions rules for consumer credit · 2026-04-27
  2. CP26/7: Credit Information Market Study: Proposed Approach to Implementing FCA Remedies · 2026-02-20
  3. PS26/1: Regulation of Deferred Payment Credit (unregulated Buy Now Pay Later) · 2025-07-16
  4. PS20/8: Motor finance discretionary commission models and consumer credit commission disclosure · 2019-10-14
  5. Financial Policy Committee Record – April 2026 · 2026-04-01
  6. PS25/11: Mortgage Rule Review: First steps to simplify our rules and increase flexibility · 2025-05-06
  7. CP21/30: Debt packagers: proposals for new rules · 2021-11-16
  8. PS19/6: Rent-to-own price cap – feedback on CP18/35 and final rules · 2019-03-01
  9. PS18/19: Assessing creditworthiness in consumer credit · 2017-07-27
  10. CP25/27: Motor finance consumer redress scheme · 2025-10-05

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This guide is compiled automatically from 10 primary-source documents published by United Kingdom's regulators, reviewed by RegAlert, and refreshed monthly (last updated 2026-07-12). It is not legal advice — always confirm requirements with the regulator or local counsel before acting.