Buyers spend £ 2.3bn via controversial ‘buy now, pay later’ loans to fund Christmas
Alice Tapper, a financial activist, said: “Millions of consumers, many of whom are teenagers and in their early twenties, have bought now, later worry about the mindset that some companies and retailers are promoting in such a way. irresponsible. It is inevitable that some will start the New Year with a serious hangover. ”
The industry is unregulated, but there is growing pressure for companies to come under the auspices of the city’s watchdog, the Financial Conduct Authority. An independent review of the sector should be published in spring.
Ms Tapper added, “The fact that these products are available at the time of purchase, on impulse and remain unregulated has created a perfect storm. Without urgent FCA intervention, we will continue to see young and vulnerable consumers being exploited.
Alex Marsh, from Klarna, said buy now, pay later on condition alternative to credit cards and allowed customers to try on the items before paying in full. He said consumers are valued every time they make a purchase with Klarna to make sure they aren’t spending beyond their means.
Clearpay said its customers wanted to spread their payment over an extended period, rather than building their credit score. The company said it does not allow buyers to fall into a “revolving debt trap” and that accounts are frozen if users miss a payment.
Gary Rohloff of Laybuy said that, unlike competing companies, he had customer credit check to make sure they could pay it back. About 25% of users were rejected on their first application.