Deferred Payment Credit: Step-by-Step Guide to FCA Authorisation

DPC temporary permissions regime registration deadline – apply by 15^th May

From 15^th July 2026 Deferred Payment Credit (DPC) will fall under FCA regulation. Lenders currently offering interest-free, short-term installments must apply for FCA authorisation under the Temporary Permissions Regime if they are not already regulated.

The FCA has published its ‘Directions’ for firms wishing to enter the TPC. Firms will need to:

• Ensure they have clear evidence that they undertake DPC activity

• Complete and submit the form to the FCA between 15 May and 1 July 2026.

• Pay the registration fee of £280.

Firms that don’t wish to continue DPC activity after 15 July 2026 don’t need to register.

TPR for buy now pay later

Firms that already have consumer credit permissions can continue to lend, however those who don’t will need to enter the Temporary Permissions Regime before authorisation day (15 July). Registration for the TPR opens on 15^th May and closes on 1 July.

Regulation Day

Firms in the Temporary Permission Regime will need to comply with most FCA rules from Regulation Day. A small number of rules will be disapplied, including the SM&CR, which will only apply once the firm is granted authorisation.

Firms that enter into DPC agreements after regulation day without permission will be committing a criminal offence.

Firms will be able to continue to service DPC agreements that were taken out before Regulation day, as these agreements will remain unregulated.

Preparing for TPR and Regulation Day

The TPR notification form requires structured regulatory data, and will need preparation of:

Evidence of activity

• The number of DPC agreements outstanding, projection of income from DPC activities for the next year, projection of value of DPC lending.

• Confirmation of the business model (lender, or merchant, or broker).

Firm-level information

• Legal entity details, registered office, trading names

Be aware that the TPR period isn’t a ‘grace’ period: firms should be gearing up to comply with most FCA rules from 15 July 2026. The TPR defers full authorisation assessment – not the conduct requirements.

Regulations

The FCA will be scrutinising DPC firms in the first few years on three key areas:

Creditworthiness and affordability assessments: DPC has historically relied on frictionless onboarding. Under FCA regulation, firms will need to evidence that they are not enabling unsustainable borrowing. Affordability assessments will need to be proportionate but meaningful. One key aspect of regulation that firms new to the FCA will need to plan for is evidencing decisions: can you reconstruct what happened in any individual lending decision and explain what happened, why and who was responsible?

Customer understanding, disclosures, and the Consumer Duty: The Duty was implemented to raise standards, and firms must ensure that customers understand what they’re taking on, especially around missed payments and broader consequences, including to their financial wellbeing and to their future ability to take out credit.

Arrears handling and forbearance: The FCA has a strong focus on the post-sale customer journey, and in particular, foreseeable harm. How firms behave when customers miss payments is an area of particular regulatory scrutiny. The FCA will test the treatment of customers in financial difficulty and will want to see appropriate use of a wide range of forbearance options. This will mean building a formal forbearance framework, covering in which situations each option will be appropriate and training staff on how to apply them in practice.

For organisations new to regulation, this is an understandably daunting process. We can help you with our bespoke assistance with BNPL authorisation: contact robert.bell@rbcompliance.co.uk.

We also offer a range of support to help firms new to FCA regulation to start the process of authorisation and to embed its compliance regulations. Our services include FCA Application templates and bespoke support for the authorisation process. The Consumer Duty and SMCR are complex and multifaceted regimes; we offer free webinar introductions as well as a variety of templates and guides.