An attempt by a cross-party group of 70 MPs to get buy-now pay-later providers regulated in three months, has failed.
Stella Creasy, the MP for Walthamstow who previously campaigned for tougher regulation on payday loans, was leading the group, using the hashtag ‘stop the #klarnage’, and joining campaigners such as Martin Lewis of MoneySavingExpert and Alice Tapper of Go Fund Yourself.
In a statement she highlighted that one in four consumers used buy-now pay-later (BNPL) services during Christmas.
The group of MPs had hoped to table amendments to the financial services bill that would force the Treasury to introduce regulations within three months of the bill being passed. But last week parliament voted down the amendment.
Tweeting her reaction, Creasy said: "The government voted down our call to regulate BNPL companies - a quarter of their customers have had to ask family or friends to pay back money, 1 in 10 are left struggling to pay rent. Ask your MP if they missed this chance to stop the next Wonga."
This is not the first call for regulation of these firms, such as Klarna and ClearPay. In December 2020, Which? called for regulation after its research found “concerning” industry practices, such as encouraging consumers to spend more money than they had planned.
Creasy said: “Buy-now-pay-later companies are not regulated like other forms of credit, meaning they don’t have to provide the same information to consumers about costs or make the same assessments about whether they can afford goods.
“It took too long for the government to respond to concerns about payday lenders like Wonga, which lead millions getting into debt with them.”
Last year, the FCA launched a probe into the creditworthiness checks among such firms.