UK Government votes down bill to regulate BNPL firms
The UK Government has voted down a bill supported by 70 MPs to regulate buy now, pay later firms like Klarna, Laybuy and Clearpay.
The amendment to the financial services bill was sponsored by Labour MP Stella Creasy, who referred to the entry of a host of BNMPL firms as the “next Wonga waiting to happen”.
The BNPL industry has seen huge growth in recent years, with the likes of Klarna and Affirm becoming multi-billion dollar giants.
According to research by Credit Karma, a quarter of Brits used buy now, pay later services to fund Christmas shopping, setting up a £2.3 billion bill.
A recent study by Capco reveals that more than half of 18-34 year olds using it have missed a payment and nearly two thirds say it is making them spend more, potentially increasing their chances of getting into debt.
The Financial Conduct Authority is conducting a review into buy now, pay later firms, but some MPs worry that the lengthy process could push regulation out by another 18 months, leaving consumers drowning in debt during an economic downturn.
Creasy express disappointment in the Commons vote in a video posted on twitter headlined “Why we need to stop the Klarnage”.