Four and a half years, four Prime Ministers and one General Election later, BNPL regulation is finally within reach. The FCA first called it urgent back in 2020. Now, with HM Treasury wrapping up its work, regulation is expected to land in the second half of 2026.
That’s great news — and exactly what Klarna has been calling for since December 2020. Regulation will protect consumers, raise industry standards and bring clarity for retailers.
Klarna’s ready. We already offer regulated credit, operate under FCA supervision, and helped inform Treasury how our products work so the upcoming framework makes sense. While the FCA still needs to iron out a few technical details, here’s what we expect the rules to cover (guidance only, not legal advice):
Scope: Covers BNPL funded by third parties (like Klarna). Retailers financing from their own balance sheets aren’t covered (yet), while the Treasury is monitoring potential harm.
Credit broking: Merchants will not need a credit broking licence needed to offer interest-free, short-term BNPL.
Advertising & promotions: BNPL falls under the FCA’s Financial Promotions regime. Merchants must use pre-approved materials or get approval for their own.
Pre-contract info & credit agreements: BNPL providers must share clear information before credit is agreed. Klarna will handle this within the checkout flow and is something we are already doing for a long time.
Creditworthiness: creditworthiness assessments will be required. Klarna already does this to regulated standards.
Customers in difficulty: Providers must follow set rules when helping customers in arrears. Klarna is already aligned.
Section 75: Consumers get added purchase protection. Klarna already has been offering similar protections under its Buyer’s Protection.
Financial Ombudsman: customers can escalate complaints to the Financial Ombudsman Service.
What’s Next?
Klarna is uniquely positioned for these changes because we’re no stranger to regulation. In the UK we already operate as an authorised payments institution and consumer credit firm - this means, what the new rules require is already built into our DNA.
The handover from the Treasury to the FCA is just the start of the final chapter. Klarna will stay closely involved as the details are locked in — and we’ll keep merchants and partners informed every step of the way. Regulation is coming, and Klarna is more than ready.