TL;DR
UK businesses can offer finance to customers through an FCA-authorised lender as an appointed representative, or by obtaining their own FCA consumer credit authorisation. Consumer credit to individuals is regulated under the Consumer Credit Act 1974 and the FCA regime. Buy Now Pay Later (BNPL) is regulated by the FCA from 15 July 2026. B2B trade credit to limited companies is not regulated. Average order value increases of 15 to 25 percent are reported by businesses offering point of sale finance.
Last reviewed: June 2026 | Sources: FCA Register, FLA, HMRC, legislation.gov.uk
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Key Facts BNPL regulation: From 15 July 2026Regulated by: FCA under CCA 1974Appointed rep route: Via FCA-authorised lenderAvg order value uplift: 15-25% (sector data) |
Why offer finance to customers?
Offering finance at the point of sale allows customers to spread the cost of purchases, increasing conversion rates and average order values. Retail and B2B research consistently shows businesses offering finance see average order value increases of 15 to 25 percent and higher conversion rates for high-ticket items. Finance removes the upfront cost barrier and allows customers to match payment timing to their cash flow.
FCA regulation of customer finance
All consumer credit agreements -- including point of sale finance, deferred payment, hire purchase and buy now pay later -- are regulated by the FCA under the Consumer Credit Act 1974 and the Financial Services and Markets Act 2000. Any business that offers credit to individuals (including sole traders in some circumstances) must either hold FCA credit broking or consumer credit authorisation, or operate as an appointed representative (AR) of an FCA-authorised lender.
From 15 July 2026, BNPL agreements previously exempt from FCA regulation are brought within the regulatory perimeter. Businesses offering BNPL via platforms such as Klarna, Clearpay and Laybuy must ensure the BNPL provider is FCA-authorised and that their own broker arrangements comply with the new rules.
How to offer finance: three main routes
Route 1: Appointed Representative (AR) -- the business becomes an AR of an FCA-authorised lender or finance platform. The authorised lender is responsible for regulatory compliance. The business introduces customers and earns an introductory commission. This is the most common route for smaller retailers. Platforms including Divido, Deko and Duologi operate AR networks.
Route 2: Direct FCA authorisation -- larger businesses with significant credit volumes can apply directly to the FCA for consumer credit authorisation. This requires meeting FCA capital adequacy standards, implementing appropriate systems and controls, and ongoing regulatory compliance. Direct authorisation provides greater flexibility but carries higher compliance costs.
Route 3: Lender-direct white label -- some lenders (including Novuna Consumer Finance) provide white-label or co-branded finance for retailers without the retailer needing their own authorisation. The lender provides the point of sale finance technology, the retailer uses it under the lender's regulatory umbrella.
Routes to Offering Customer Finance
| Route | FCA Status | Best For | Key Requirement |
|---|---|---|---|
| Appointed Representative | Via authorised lender | Small-medium retailers | AR agreement with authorised firm |
| Direct FCA Authorisation | Fully authorised | Large retailers, high volumes | FCA application, capital adequacy |
| Lender white label | Lender is authorised | Any retailer | Agreement with lender platform |
| B2B trade credit | Not regulated (CCA) | Business customers only | Standard trade terms, credit checks |
Source: FCA, Consumer Credit Act 1974. BNPL regulation effective 15 July 2026.
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Disclaimer This guide is for information only and does not constitute financial advice. Asset finance products vary by lender and business circumstances. Always verify lender details on the FCA Financial Services Register at register.fca.org.uk before applying. Kael Tripton Ltd is an independent editorial publisher and is not regulated by the FCA. |
Frequently asked questions
Do I need FCA authorisation to offer finance to customers?
If you offer credit to individuals (including sole traders in some circumstances), you must either hold FCA credit broking or consumer credit authorisation, or operate as an AR of an FCA-authorised firm. Offering credit without authorisation is a criminal offence under FSMA 2000. Check register.fca.org.uk to verify any finance platform you use is appropriately authorised.
What is an FCA appointed representative for customer finance?
An AR is a business that conducts regulated activities -- credit broking -- under the regulatory umbrella of an FCA-authorised firm (the principal). The principal is responsible for the AR's compliance. The AR does not need its own FCA authorisation. Most point of sale finance platforms operate through AR networks.
Will BNPL be regulated from July 2026?
Yes. The FCA's new BNPL regulation comes into force on 15 July 2026. BNPL agreements previously exempt from FCA regulation are brought within the Consumer Credit Act framework. BNPL providers must be FCA-authorised. Consumer rights including FOS access will apply to BNPL complaints from this date.
Can I offer interest-free credit to customers?
Interest-free credit where the retailer meets the interest cost is regulated if offered to individuals. The retailer must either be FCA-authorised or an AR of an authorised lender. Zero-percent finance to limited company customers (B2B) is not regulated under the Consumer Credit Act provided the customer is a limited company.
How does offering finance affect my profitability?
Subsidised interest-free credit typically costs the retailer 3 to 7 percent of the transaction value. This must be weighed against the uplift in conversion and average order value. For high-ticket items where the finance barrier significantly reduces purchase probability, the margin cost is typically offset by volume increase. Run a break-even analysis before committing to a subsidised finance programme.
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Sources FCA: Consumer Credit Authorisation |
