Carat£13 billion of buy-now-pay-later is now inside the FCA's perimeter
Deferred payment credit came under Financial Conduct Authority supervision on 15 July. The market ran from £60 million of transactions in 2017 to more than £13 billion in 2024, with about 11 million British users. Lenders now owe affordability checks and Ombudsman access.
§1Three weeks old, and not yet noticed.
Three weeks ago the interest-free instalment plan at the jewellery counter stopped being unregulated, and most of the trade has not noticed. From 15 July, deferred payment credit, the model that underpins buy-now-pay-later, came inside the United Kingdom's regulatory perimeter under the Financial Conduct Authority. This is a three-week-old rule change rather than news of the day, and it is being filed now because its operative consequences land on retailers over the next five months rather than on the day it commenced.
The scale explains why the regulator moved. Buy-now-pay-later transaction value in Britain went from about £60 million in 2017 to more than £13 billion in 2024, and the FCA puts the number of British consumers using these products at around 11 million. That is a consumer credit market the size of a mid-tier bank that grew for seven years with no affordability rules, no disclosure standard and no route of complaint. Jewellery sits squarely inside it, because a £900 ring split into four payments is exactly the ticket the product was designed for.
§2Why the regulator moved.
What the rules actually require is short to state. Lenders must carry out proportionate checks that a customer can afford to repay before the credit is offered. Consumers must be given clear upfront terms covering when payments fall due, how much they are, and what happens if one is missed. And a customer who is treated badly can now take the complaint to the Financial Ombudsman Service, which is the change with teeth, because it converts a commercial dispute into a supervised one. Firms could register for a temporary permissions regime between 15 May and 1 July, and those holding temporary permission have six months from commencement to apply for full authorisation.
That is a consumer credit market the size of a mid-tier bank that grew for seven years with no affordability rules, no disclosure standard and no route of complaint.
§3What the rules actually require.
For a jeweller the exposure is indirect but real. Most independents do not lend; they accept a provider's plug-in at checkout, and the authorisation obligation sits with the provider. But a shop that promotes a finance option in its window or its email is making a representation about credit, and the January deadline for providers to be fully authorised is the date at which some smaller providers will fail to clear the bar and withdraw. A retailer whose average ticket depends on a four-payment split should be asking its provider now, in writing, whether it holds full authorisation or temporary permission.
The useful question is not compliance but conversion, because affordability checks introduce friction into the exact moment a customer decides. A proportionate check at a £900 ring is a pause, and a pause at the till costs sales in a way no rule can price. That is the trade-off Britain has chosen and the American trade should watch it, because the same product has grown the same way in the United States with the same absence of rules. Ask your provider two questions this month: are you fully authorised, and what does your check add to checkout time.
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