Five years on from the Treasury’s initial pledge, Parliament now has the Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025 on its table. Once approved, it will pull most third-party Buy-Now-Pay-Later (BNPL) arrangements – technically “short-term interest-free credit” (STIFC) – inside the perimeter of FCA regulation by summer 2026. Below we unpack what is changing, who will (and will not) need authorisation, the timeline, and the practical steps MEMA Consultants recommends

1. Why is the exemption being narrowed?

• Rapid growth and rising risk – Online check-out providers have made it effortless to split modest purchases into three or four payments, often with a grace period before the first installment. Affordability checks and balanced advertising have not kept pace, raising concerns over hidden indebtedness and repeat roll-overs.‍
• Policy aim – Preserve low-risk, in-store “pay in instalments” offers while capturing higher-risk, third-party models that stand between the retailer and customer.

2. The new perimeter test

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The exemption will continue to require:

• ≤ 12 instalments, all within 12 months
  
  
• 0 % interest and no other charges
  
  
• Fixed-sum, borrower-lender-supplier credit
  
  

—but from 2026 it is available only where the lender and supplier are the same person. Otherwise the agreement becomes a regulated deferred payment credit agreement and falls squarely under the Consumer Credit Act and FCA oversight.

3. Timeline

4. Practical implications for businesses

Failing to plan now risks a hard stop on lending once the Order takes effect – and possible criminal liability for unauthorised credit activity.

5. How MEMA Consultants can help

• Regulatory impact assessment – We map your current instalment models against the revised exemption and identify permission gaps.
  
• Authorisation strategy – End-to-end support with FCA applications or variation of permission, including business plans, financials and Consumer Duty outcomes testing.
  
• Interim compliance – Set-up for the Temporary Permissions Regime, ensuring uninterrupted trading while your full application is processed.
  
• Governance & controls build-out – Tailored policies for affordability, credit promotions, vulnerable customers and complaints adapted to BNPL specifics.
  
• Training & change management – Board and staff education, plus template disclosures aligned with the forthcoming rulebook.
  
  

Next steps

1. Map your credit flows – Confirm who is acting as lender in every installment arrangement.
   
2. Commission a gap analysis – Identify whether you, your group finance vehicle, or your third-party partner will need authorisation.
   
3. Budget for the FCA process – Application fees, capital requirements and ongoing levies will apply; build them into 2025/26 forecasts.
   
4. Engage early – Authorisation queues lengthen quickly. An early dossier improves prospects of approval before the 2026 deadline.
   

Need a deeper dive or a readiness workshop? Book a call with our regulatory team at a time that suits you: Schedule here.

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