Buy Now Pay Later regulation must be matched by genuine action
Few payment methods have experienced such exponential growth as ‘buy now pay later’.
In a year that has kept us at home, the convenience and flexibility it offers consumers has more than trebled demand. Five million of us have spent £2.7 billion using the service since the pandemic began.
But with ease and flexibility, comes compromise. And we’ve heard instances this year of some of that pain.
Stories have emerged of consumers accidentally using BNPL at checkout, of not receiving notifications when they’ve missed a payment and even of being incentivised to use it in exchange for a charity donation. Quite rightly, these began to raise red flags with the regulator.
Woolard review: FCA cracks down on £2.7bn buy-now-pay-later market
The Financial Conduct Authority said it would share infomation with its Jersey counterpart regarding Neil Woodford
Interest-free buy-now-pay-later credit agreements will be regulated by the City watchdog after the market swelled to £2.7bn last year.
The plans, drawn up by the Financial Conduct Authority (FCA), have been designed to protect consumers, after the use of buy-now-pay-later (BNPL) transactions tripled in 2020, as shoppers looked for ways to spread their money further during the pandemic.
The decision was made as part of an FCA review into the unsecured credit market, carried out by former interim chief executive Christopher Woolard.
City watchdog to crack down on ‘buy now pay later’ firms
Buy now pay later firms such as Klarna have come under fire amid concerns they encourage shoppers to run up debts (Getty Images for POPSUGAR)
The City watchdog is preparing to move in on so-called buy now pay later firms such as Klarna following a review of the unsecured credit market.
The Financial Conduct Authority (FCA) will this morning publish a report by interim chief executive Chris Woolard recommending that the sector be brought under the regulator’s remit, Sky News reported.
Advertising watchdog bans Klarna Instagram ads
Several Klarna adverts were banned by the ASA after being deemed irresponsible.
The advertising watchdog has banned several Klarna shopping adverts that appeared on Instagram and encouraged consumers to use Klarna to shop and ‘boost their mood’.
The Advertising Standards Agency (ASA) has banned Klarna’s Instagram campaign from appearing again, and warned the influencers involved to not “irresponsibly” encourage the use of Klarna’s deferred payment service.
The Swedish fintech firm is the highest-valued private fintech in Europe after a September funding round valued the group at $11bn (£8.54bn).
It has 9 million users in the US, and has more than 1.2 million active monthly users worldwide.