Navigating UK Payment Plans for Aesthetic Treatments

The aesthetic and anti-wrinkle treatment sector in the UK has experienced considerable expansion, with many clinicians increasingly adopting flexible payment solutions, such as payment plans and membership schemes. These offerings aim to enhance accessibility for clients, aligning with a broader consumer inclination towards “Buy Now, Pay Later” (BNPL) options observed across diverse industries. A critical question for these businesses revolves around whether such financial arrangements necessitate authorisation from the Financial Conduct Authority (FCA). The regulatory landscape governing consumer credit in the UK is intricate and the determination of whether a licence is required is highly dependent on the specific structure and terms of the payment arrangement.

This blog aims to elucidate the FCA’s consumer credit regime, providing clarity on when authorisation is required, highlighting crucial exemptions that may apply and discussing significant upcoming regulatory changes that will directly impact aesthetic clinics. A thorough comprehension of these regulations is paramount, as non-compliance carries substantial legal and financial risks, including criminal penalties and unenforceability of agreements. The increasing adoption of flexible payment options in the aesthetics sector, coupled with the FCA’s growing scrutiny of consumer credit, particularly BNPL, indicates a convergence of market practice and regulatory attention. The prevalence of BNPL usage across the UK, with “lifestyle and beauty purchases” frequently cited as a common application, has prompted the FCA to actively engage in regulating these products, citing concerns about consumer information and affordability. This means that aesthetic clinicians, even if they currently perceive their offerings as exempt, are operating within a financial service area that is under heightened regulatory oversight. Their current practices, if not meticulously compliant, face an increased risk of future enforcement or becoming non-compliant with impending new rules, necessitating a proactive approach to regulatory adherence.

What Constitutes “Credit” and a “Regulated Credit Agreement” in the UK?

Under the Consumer Credit Act 1974 (CCA) and the Financial Services and Markets Act 2000 (FSMA), the definition of “credit” is exceptionally broad. It extends beyond simple cash loans to encompass “any other form of financial accommodation”. This comprehensive definition ensures that any arrangement where a debtor is permitted to defer payment of a debt or to incur a debt and defer its settlement can be considered as providing credit. For aesthetic clinics, this wide scope means that merely allowing a client to pay for a treatment over an extended period, rather than requiring upfront payment, can indeed fall under the definition of providing credit.

An agreement is classified as a “regulated credit agreement” when it is made between an individual (or certain small partnerships or unincorporated associations) and a creditor, and the creditor provides credit of any amount. A significant reform introduced by the 2006 Act abolished the previous £25,000 financial limit under the 1974 Act. Consequently, the value of the credit no longer determines whether an agreement is regulated; any credit agreement that does not qualify for a specific exemption is now considered regulated. This expansive definition and the removal of the financial threshold create a wide regulatory net that captures many seemingly innocuous payment arrangements. This indicates a proactive stance by UK regulators to extend consumer protection across all sizes of credit, not just large loans. The implication is that even small payment plans for aesthetic treatments, which might individually appear insignificant, can fall under the regulatory umbrella. The broad definition ensures that any deferral of payment, regardless of its specific structuring or nomenclature, is considered. This regulatory approach is rooted in comprehensive consumer protection, extending to nearly all credit arrangements, irrespective of their size or the perceived risk by the provider. It shifts the onus onto businesses to meticulously understand if their payment terms constitute credit, rather than assuming small amounts are inherently exempt, a particularly critical point for aesthetic clinics where individual treatment costs might be lower than those of traditional loans but still involve deferred payments.

If an arrangement constitutes a “regulated credit agreement,” the firm undertaking specific related activities must be authorised by the FCA. These activities include entering into a regulated credit agreement as a lender, exercising the lender’s rights and duties under such an agreement, credit broking (which involves arranging credit for other individuals), and various debt-related activities such as debt collecting, debt adjusting, and debt counselling. For aesthetic clinics, the primary regulatory concern would be “entering into a regulated credit agreement as lender” if they directly offer payment plans, or “credit broking” if they facilitate or introduce clients to third-party finance providers.

Key Exemptions: When a Licence May Not Be Required

The “four payments in 12 months, interest-free” exemption is arguably the most pertinent exemption for many businesses, including aesthetic clinics. An agreement is generally not considered a regulated credit agreement if it meets specific conditions: it must be a fixed-sum credit agreement, the total number of payments required from the debtor must not exceed four, these payments must be scheduled to be made within a period not exceeding 12 months from the date of the agreement, and, crucially, no interest or any other charges (beyond specific default charges) are applied to the credit. This exemption is commonly known as the”0% interest, 4-instalment rule.”If an aesthetic clinic offers a payment plan where a client pays for a treatment in, for example, three equal monthly instalments with absolutely no additional interest or administrative fees, it would likely fall squarely within this exemption.

A critical caveat is that this exemption is rendered void if any charge forms part of the total charge for credit, other than specific, permitted default charges. This means that even a seemingly minor administration fee, a setup charge, or a late payment fee that goes beyond merely covering the reasonable costs of default administration, could trigger the requirement for FCA regulation. The strict “no interest or other charges” condition for the four-payment exemption highlights the FCA’s clear intent to regulate any arrangement where the lender derives financial benefit beyond the simple repayment of the principal amount. This stringent condition implies that even a small, seemingly benign fee would likely invalidate the exemption. This promotes transparency and prevents firms from attempting to circumvent regulation by simply re-labelling “interest” as a different type of “fee.” It also underscores that the FCA considers any financial benefit derived from the deferral itself as a form of credit charge, thereby warranting regulatory oversight.

While less commonly applicable to aesthetic clinics offering general payment plans, other specific exemptions do exist. These include, for instance, certain arrangements by charities or specific types of business-to-business lending. However, it is important to note that if the business customer is a sole trader, a partnership with fewer than four partners, or an unincorporated association, even business-to-business lending might necessitate FCA authorisation.

The Evolving Landscape: Buy Now Pay Later (BNPL) and Deferred Payment Credit (DPC)

Historically, many interest-free delayed payment methods, widely known as Buy Now Pay Later (BNPL) or Deferred Payment Credit (DPC), have operated under a specific exemption (Article 60F of the Financial Services and Markets Act (Regulated Activities) Order 2001) where no interest is charged. This exemption meant that firms offering only such products did not require FCA authorisation, and these agreements were not subject to the stringent form requirements of the Consumer CreditAct 1974. This is precisely why many aesthetic clinics have been able to utilise or partner with third-party BNPL providers for interest-free payment plans without needing to hold their own FCA licence.

A pivotal shift in the regulatory landscape is imminent. The UK government has legislated to bring DPC (defined as interest-free credit for goods or services, repayable in 12 or fewer instalments within 12 months or less) under FCA regulation. From 15 July 2026(referred to as”Regulation Day”), third-party lenders who offer DPC agreements to finance the purchase of goods or services from a merchant will be required to obtain FCA authorisation or operate under a temporary permission regime. Crucially, merchants (such as aesthetic clinics) who offer their own DPC agreements directly will remain outside the regulatory perimeter and will not require authorisation, provided they continue to meet the existing exemption criteria. However, if merchants promote credit provided by authorised BNPL providers, their financial promotions will need to be approved by an FCA-authorised firm, most likely the BNPL provider they are partnering with. This establishes a nuanced dual system: clinics offering their own 0%interest, 4-payment plans (falling under the existing exemption) can continue without a licence, but if they partner with a BNPL company for longer-term or more complex plans, that third-party provider will need to be FCA- authorised.

For third-party DPC lenders, the new regulatory framework will impose several key requirements. Lenders will be mandated to conduct proportionate affordability assessments to ensure that borrowers can repay BNPL loans without undue financial strain. Firms will also be required to provide consumers with clear, timely, and useful information to enable informed decisions about DPC borrowing. The FCA’s overarching Consumer Duty, which mandates firms to act to deliver good outcomes for retail customers, ensuring fair value, clear communications, and appropriate support, will apply. Furthermore, consumers will gain access to an independent dispute resolution service through the Financial Ombudsman Service for any issues that arise. A Temporary Permissions Regime (TPR) will be established to allow existing third-party DPC lenders to continue operations while the FCA processes their applications for full authorisation.

The FCA’s phased and differentiated approach to BNPL regulation, maintaining existing exemptions for direct merchants while regulating third-party lenders, reveals a strategic balancing act. This approach aims to address consumer protection concerns associated with the scale and systemic risk posed by large third-party lenders, while simultaneously attempting to avoid imposing undue burdens on smaller businesses like individual clinics that offer direct, limited-term, interest-free payment options. This indicates a focus on mitigating systemic risk and addressing consumer vulnerability at an institutional level, rather than a blanket regulation of every micro-level transaction by direct service providers. The clear distinction implies that the FCA is not universally regulating the product (interest-free deferred payment) but rather the entity providing it and the scale and nature of that provision. Third-party BNPL firms operate across numerous merchants, accumulating significant consumer credit exposure and data, and often target younger, potentially more vulnerable demographics. In contrast, direct merchants typically provide credit for their own services, often to existing clients, and the scale of their individual credit provision is generally smaller. The underlying trend points to a regulatory response aimed at addressing the rapid growth of a new financial sector (BNPL providers) that was previously largely unregulated. The FCA is targeting the systemic risks and potential for widespread consumer harm posed by large-scale, tech- driven credit providers, while acknowledging that direct, zero-interest payment plans offered by service providers for their own services pose less of a systemic risk, provided they strictly adhere to the existing “no charge, 4-payment” exemption. This suggests that clinics should be particularly cautious about inadvertently becoming a “third-party lender” themselves by, for example, establishing a separate lending entity or offering credit for services not directly provided by them.

Membership Schemes: Are They Caught by Regulation?

The regulatory status of membership schemes in the aesthetic sector is highly dependent on their precise structure and the financial arrangements involved. If a membership scheme involves clients paying a regular fee (e.g., monthly instalments) to accumulate credit or access discounts for future treatments, and there is no immediate deferral of payment for services already received, this typically does not constitute “credit” under FCA regulation. Such arrangements are generally viewed as akin to a savings plan, a pre-payment model, or a loyalty program, where the client pays before the service is rendered. The key distinguishing factor here is the flow of money versus the delivery of service. If money is paid before the service is rendered, it functions as a pre-payment, not as credit. The core definition of “credit” involves deferring payment of a debt or incurring a debt and deferring its payment. In a pre-payment membership model, the customer is paying in advance (even if in instalments) for a service they will receive later, meaning no “debt” is being created and then deferred from the clinic’s perspective. This type of membership, where the clinic holds the client’s money before the service is delivered, typically falls outside the definition of credit that triggers FCA authorisation.

Conversely, if a membership scheme permits clients to receive treatments immediately or now and then pay for them in instalments later (i.e., after the service has been provided), this unequivocally involves a deferral of payment. Such an arrangement would likely fall under the broad definition of “credit”.6 In such instances, the clinic would need to meticulously assess whether the specific arrangement qualifies for an existing exemption (such as the “four payments in 12 months, interest- free” rule) or if it triggers the requirement for FCA authorisation. This scenario essentially constitutes a payment plan structured as a membership. The regulatory status is determined by the substance of the transaction (deferred payment for a service already rendered), rather than its label. Some sophisticated membership schemes might incorporate both elements, for example, a monthly fee that grants access to discounted treatments and also allows for deferred payment on higher-value services. In such cases, each distinct component of the scheme would need to be assessed separately against the FCA’s consumer credit rules. The FCA’s regulatory approach consistently prioritises the substance of a financial arrangement over its superficial label. Therefore, simply calling something a “membership” does not automatically exempt it from regulation if it functionally provides credit. This reflects a fundamental regulatory principle of looking beyond naming conventions to the actual economic reality and potential consumer impact of a transaction. If a “membership” scheme involves a client receiving a service before the full payment for that service has been made, it inherently creates a debt that is being deferred, aligning directly with the definition of “credit”. This means clinicians cannot circumvent regulatory requirements by merely re-labelling a credit arrangement. The FCA’s approach is to scrutinize the underlying mechanics of the transaction, requiring clinics to diligently review the terms and conditions of their membership schemes to identify any element of deferred payment for services already rendered, as this is the primary trigger for consumer credit regulation.

Why FCA Authorisation Matters: Risks of Non-Compliance

Operating regulated consumer credit activities without the necessary FCA authorisation is a serious criminal offence. This can result in severe penalties, including substantial fines and/or imprisonment for individuals involved. Furthermore, credit agreements entered in to by an unauthorised firm are generally unenforceable. This means the clinic may be legally unable to recover outstanding payments from clients, leading to significant financial losses. Clients who have suffered losses due to such unenforceable agreements may also be able to claim compensation.

Operating outside established regulatory boundaries can severely harm a clinic’s reputation, leading to a significant loss of client trust and, consequently, business. The FCA also possesses the power to issue public warnings about non-compliant firms. 20 The FCA has extensive powers to take enforcement action against firms that fail to comply with regulations. These actions can include imposing hefty fines and, in severe cases, withdrawing any existing authorisation. 20 Additionally, the FCA’s Consumer Duty applies to all regulated firms, setting high standards for fair customer treatment.2 The severe penalties for non-compliance(criminal charges, un enforceability of agreements, significant fines) demonstrate that the FCA views unauthorised credit activity not merely as a technical breach, but as a serious threat to consumer protection and overall market integrity. This serves as a powerful deterrent, underscoring that the cost of compliance, while potentially substantial, is significantly less than the potential cost and consequences of non- compliance. The unenforceability clause is particularly impactful, as it undermines the very purpose of offering credit—to secure payment for services. The UK’s regulatory framework is deliberately designed to make unauthorised lending economically unviable and legally perilous, creating a strong incentive for aesthetic clinics to either rigorously adhere to the specified exemptions or to proactively seek proper FCA authorisation. This also highlights the FCA’s robust commitment to consumer redress, as customers are empowered to claim compensation even if the firm they dealt with was operating without the necessary authorisation.

Practical Steps for Aesthetic Clinicians

Clinicians should conduct an immediate and thorough audit of all current payment plans and membership schemes. The objective is to precisely determine if these arrangements fall under the definition of “credit” and, if so, whether any applicable exemptions, particularly the “four payments in 12 months, interest-free” rule, are genuinely and strictly met.3 This initial audit is a critical first step to identify any potential compliance gaps or areas of risk.

For any payment plans that extend beyond the strict confines of the “four payments in 12 months, interest-free” exemption, or those that involve any form of interest or charges, partnering with an FCA-authorised third-party finance provider is often the most practical and legally sound solution. Examples of such partnerships are already prevalent in the aesthetic sector.22 This strategy effectively offloads the complex regulatory burden and associated risks onto a specialist financial services firm that is equipped and authorised to handle consumer credit. The widespread practice of aesthetic clinics already partnering with third-party finance providers suggests an existing industry awareness of the complexities and regulatory burdens associated with directly offering credit. This trend indicates that for many clinics, outsourcing the regulated activity is the path of least resistance, rather than undertaking the significant and costly process of seeking direct FCA authorisation themselves. For the majority of aesthetic clinics, the practical implication of FCA regulation is not necessarily that they must become FCA authorised. Instead, it means that any credit offered or facilitated through their practice must be handled by a properly authorised entity. This outsourcing model is a pragmatic response to the high barrier to entry for FCA authorisation, allowing clinics to focus on their core medical services while still providing flexible payment options to clients.

If a clinic currently partners with or plans to partner with third-party BNPL providers, it is imperative to ensure that these providers are actively preparing for, or have already obtained, FCA authorisation by July 15, 2026.2 While clinics offering direct DPC(provided they meet the exemption criteria) will remain exempt, those acting as credit brokers for regulated DPC will need to ensure that their financial promotions are approved by the authorised lender.15 This highlights the ongoing need for due diligence and clear communication with any third-party finance partners.

Given the inherent complexity and nuanced interpretations of consumer credit law, coupled with the severe consequences of non-compliance, it is highly advisable for aesthetic clinicians to seek specialist legal advice. This ensures that their specific payment models are fully compliant with current and upcoming regulations. 4 The intricacies of defining “financial accommodation” and navigating various exemptions often require expert legal interpretation tailored to a specific business model. Finally, the regulatory landscape for consumer credit in the UK is dynamic and subject to ongoing reform, particularly concerning the Consumer Credit Act and the evolving BNPL regulation.15 Clinics should commit to staying updated on the latest FCA guidance and legislative changes to ensure continuous compliance.

Conclusion

Any payment plan or membership scheme offered by aesthetic clinicians that involves deferring payment for services already rendered will likely fall under the broad definition of “credit” and may therefore require FCA authorisation. The most common and crucial exemption for clinics is for fixed- sum credit arrangements involving four or fewer interest-free payments within a 12-month period. It is vital that absolutely no additional charges (including hidden fees or administrative costs beyond legitimate default penalties) are applied, as this would invalidate the exemption.

The regulatory landscape for Buy Now Pay Later (BNPL) and Deferred Payment Credit (DPC) is undergoing significant changes. From July 15, 2026, third-party BNPL lenders will be regulated by the FCA, which will impact clinics that partner with these providers. However, clinics offering direct DPC (provided they meet the existing exemption criteria) will continue to remain exempt from direct FCA authorisation. Operating without the required FCA licence is a serious matter, constituting a criminal offence that can lead to severe penalties, including criminal charges, unenforceability of credit agreements, and significant financial and reputational damage to the business.

Aesthetic clinicians are strongly advised to proactively review their current payment models and membership schemes to ensure full compliance with UK consumer credit law. It is highly recommended to seek expert legal advice tailored to their specific business practices. Prioritising transparent, fair, and legally compliant financial practices not only safeguards the business from severe legal repercussions but also significantly builds trust and confidence with clients, aligning with the core principles of the FCA’s Consumer Duty. The aesthetic industry, while primarily focused on health and beauty, must equally uphold the highest standards of financial integrity in all its commercial dealings.