Buy-now pay-later firms welcome Labour call to regulate amid Treasury delays
Buy-now pay-later (BNPL) firms have welcomed calls from Labour to regulate services such as Klarna in the same way as credit cards.
Shadow City minister Tulip Siddiq has urged the government to use the King’s Speech to end “dithering” and “uncertainty” over bringing in new rules on short-term loans, as first reported by the Times.
Ministers were mulling plans to bring BNPL products under the remit of the Financial Conduct Authority (FCA) but had put them on the back burner over fears firms would quit the UK in favour of more light-touch jurisdictions, which was disputed by the FCA boss.
Siddiq wrote to her Conservative counterpart Andrew Griffith that regulatory delay “has left millions of consumers unprotected and the BNPL sector in a state of uncertainty”.
And firms have welcomed Labour’s intervention and called for “higher standards” across the industry.
A Klarna spokesperson said: “We have said for a long time that BNPL should be regulated so that consumers have clear information, are protected from bad actors and have continued access to zero-cost credit. We are happy to see these principles outlined in Siddiq’s letter.”
Gary Rohloff, managing director of Laybuy, said: “As a responsible BNPL lender, we support appropriate regulation of the sector and welcome higher standards across the industry.”
A Clearpay spokesperson said the firm had always called for “fit for purpose” regulation but warned of “key differences” between credit cards and BNPL purchases.
“Credit card operators thrive when customers revolve in debt, whereas Clearpay encourages people to pay back on time,” they said. “The priority with regulation must be to protect customers and deliver much-needed innovation in consumer credit.
“Clearpay already has safeguards in place to protect consumers but we recognise that not every provider has the same approach.
“This is why we support proportionate and appropriate regulation that sets high industry standards across the board.”
A Treasury spokesperson said: “When used appropriately, BNPL can be a useful, interest-free way for consumers to manage their finances.
“We must ensure that regulation of these products is proportionate to ensure borrowers are protected without unduly restricting access. We will publish a response to our consultation in due course.”
PayPal has been approached for comment.