Buy now pay later firms in crackdown

WATCHDOG SWOOP OVER LOCKDOWN DEBTS FEARS

BUY now, pay later firms are facing tighter regulations amid fears shoppers are being lumbered with big debts.

Companies such as Klarna and Clearpay have seen business boom during lockdowns with the surge in online shopping.

The UK buy now pay later market is now worth £2.7billion, with five million using the loans to typically buy clothes and footwear last year.

One in four customers are aged 18 to 24, and three quarters under 36.

Now the Financial Conduct Authority says more than one in 10 people using such firms already have debt arrears elsewhere.

Under its clampdown, providers will face strict checks to ensure loans they give out are affordable and customers are treated fairly, particularly those who are vulnerable or struggling with repayments. It will also be easier for people to complain to the Financial Ombudsman Service.

Swedish firm Klarna uses rapper

Snoop Dogg in adverts, with the star also an investor. Shoppers can typically get items straight away, then settle up in 30 days or over several months interest-free.

Big-name retailers including fashion giants ASOS, Boohoo and New Look promote such payment options on their websites.

But the sector has been accused of encouraging people to spend more than they planned and getting into debts they cannot comfortably pay back.

Martin Lewis, founder of Moneysavingexpert.com, said firms “often targeted young people, pushed via Instagram and social media, as if it is a form of lifestyle therapy”.

Klarna said it was “very comfortable operating in a regulated environment”. Clearpay said: “We welcome today’s recommendations.”

LOAN STAR Snoop Dogg