As the cost of living crisis has grown, there has been a surge in the use of BNPL loan products.

BNPL loans allow people to buy products at the point of sale on credit to spread the cost however some critics have said they encourage some consumers to get into debt unnecessarily.

The FCA has warned that unauthorised firms might be committing a criminal offence if they fail to have an FCA-authorised firm approve their financial promotions.  

Authorised firms selling unregulated or exempt BNPL products must comply with the relevant rules unless an exemption applies. This includes that their BNPL financial promotions must be "clear, fair and not misleading." 

The FCA says it is concerned that consumers could be misled if BNPL financial promotions do not comply and has seen financial advertisements on websites and social media, including posts by social media influencers, which may breach FCA rules. 

Some ads have emphasised the benefits of BNPL products without “fair and prominent” warnings about the risks.

Sheldon Mills, executive director of consumers and competition at the FCA, said: "As we face a cost-of-living crisis, consumers are having to make difficult decisions about their finances and how they pay for goods and services.

"Firms need to ensure consumers, particularly those in vulnerable circumstances, are equipped with the right information at the right time, so they can make effective, timely and properly informed decisions. It is vital that adverts are clear, fair and not misleading."

The FCA recently held a roundtable with BNPL providers to discuss upcoming regulation and called on firms to do more to support borrowers in financial difficulty, including signposting to money guidance and debt advice.