PA’s Ruxandra Ioanitescu, payments expert, comments in an ICAEW article on buy now pay later (BNPL) providers’ plans to share customer spending data with credit reference agencies.
The article focuses on Klarna’s response to the Financial Conduct Authority’s (FCA) promise that the sector will be regulated, seeing them announce that as of June 2022 it will start to share its customer spending data with credit reference agencies - with the information set to impact the credit scores of its customers by the end of 2023.
Speaking to ICAEW, Ruxandra stressed that while the decision to share spending data might deter those who are facing financial difficulties, it will be critical that this potential impact is communicated extensively saying: “BNPL firms need to ensure they provide the right level of consumer support with clear communications so customers understand what the consequences of their borrowing could be. This of course could be exacerbated by the cost-of-living crisis as more people may turn to various forms of lending and could potentially engage in more irresponsible financial behaviours.”
She added that: “For both Klarna and the BNPL sector as a whole, it will be vital thorough vulnerability and affordability checks are carried out in order to protect against those already in financial stress so that they do not end up in an ‘even worse’ situation”.