Proportionate checks are now a requirement
Since 15 July 2026, third-party BNPL lenders in the UK have been regulated by the FCA. One of the biggest practical changes is that lenders must carry out proportionate creditworthiness and affordability assessments before giving credit, and be able to show that they did.
"Proportionate" is doing a lot of work in that sentence. A £100 purchase split into three payments doesn't need the same assessment as a car loan. But the check still has to be meaningful, and the lender has to be able to explain why it was enough.
This guide explains how open banking data works in a BNPL affordability check, what it can and can't tell you, and how to handle consent, privacy and the Consumer Duty.
What credit reference data shows, and where it falls short
Credit reference agency data remains the backbone of most lending decisions. It shows credit history, existing credit accounts, missed payments and public records such as county court judgments. For many products it works well.
For BNPL, it has three specific weaknesses. First, it lags. Credit reference data is updated periodically as lenders report it, and new borrowing can take weeks to appear. For a product where a plan may last six to eight weeks, that delay can mean a lender doesn't see plans the customer took out recently with other providers.
Second, it is thin for many BNPL customers. BNPL is popular with younger adults, many of whom have little credit history, and a thin file says little about whether someone can afford a small plan.
Third, it shows debt, not cash flow. A credit file can say what someone owes. It doesn't show how much comes in each month, what essential costs go out, or what the balance looks like today.
What consented bank data adds
With the customer's consent, an FCA-regulated account information service provider can read data directly from the customer's bank account. For a BNPL decision, the useful signals are whether salary or other income arrives regularly and roughly how much, the rent, bills, subscriptions and loan repayments that leave the account each month, the balance and recent pattern of the account including overdraft use, and payments to other BNPL providers that may not yet appear on a credit file.
Because the data comes directly from the bank, it can't be edited or exaggerated by the applicant, and it reflects the position now rather than several weeks ago.
How the check works for the customer
In a well-designed flow, the customer chooses their bank, is sent to their banking app or website to log in, approves what will be shared, and returns to the checkout. The lender receives the data, runs its assessment and gives a decision.
The check can be offered to every applicant, or only where a credit file is thin or the order value is higher. Either approach can be proportionate, as long as the lender can explain it.
Consent and privacy: what customers need to know
Customers are right to be careful about sharing bank data, and lenders should explain how it works plainly at the point of consent.
Nothing is shared until the customer chooses to connect their account and approves what will be shared and why. Account information access is read-only, so it cannot move money or change anything in the account. Consent lasts for a defined period and can be revoked through the customer's bank or the provider. The customer authenticates directly with their own bank, so the lender never sees their login details.
Account information providers must be authorised or registered with the FCA, and the data is personal data under UK GDPR. Lenders should only use it for the stated purpose and keep only what they need.
Good outcomes under the Consumer Duty
The Consumer Duty asks lenders to deliver good outcomes, which cuts both ways. A poor outcome isn't only lending to someone who can't afford it. It's also turning away someone who could, because the data available said too little.
Open banking data helps on both sides. It lets lenders say yes, with confidence, to applicants whose credit files are thin but whose finances are sound. And it lets them spot applicants who are already stretched, perhaps paying several other BNPL plans, before adding another.
It also creates a clear record of what the lender knew when it made the decision, which matters now that customers can take complaints to the Financial Ombudsman Service.
Introducing open banking checks
A few decisions come first. Lenders need to decide when the check applies, whether to every applicant, to thin files only, or above a certain order value. The consent screen should explain in plain English what is shared, why and for how long. The signals the model uses should be defined and documented, along with why they're proportionate. Only the data needed should be kept, with clear retention periods. The flow should be tested on mobile, where most BNPL checkouts happen. And declined customers should get clear information and, where appropriate, signposting to help.
How Fena helps
Fena is an FCA-regulated open banking provider. BNPL lenders can use our account information APIs to retrieve consented bank data for affordability checks, and our payment services to collect repayments, catch-up payments and refunds through pay by bank. Using one provider for both means the account a customer shares for the check is the account they can repay from.
Common questions
Are open banking checks mandatory for BNPL?
No. The FCA requires proportionate affordability checks, but it doesn't prescribe a single data source. Open banking is one way to make those checks more accurate.
Will asking customers to connect their bank hurt conversion?
Any extra step has some cost. The aim is to keep the bank connection quick and clearly explained, and to use it where it adds the most, such as for thin-file applicants.
How long does consent last?
It depends on the purpose and the provider. Consent is always limited in time and the customer can revoke it earlier.
What data should we store?
Only what you need for the decision and to evidence it. Set clear retention periods in line with UK GDPR.
Article by
Gosia Furmanik
CEO and Founder
Published on
