Responding to today’s publication of The Woolard Review into the unsecured credit market, Gary Rohloff, Managing Director and Co-Founder of Laybuy (Buy Now Pay Later Provider).
“We welcome today’s Review that highlights the benefits of the BNPL sector, and also the focus on ensuring the entire industry works in the interest of consumers.
“Firstly, I think it’s important to stress that if offered responsibly, credit offers many positive opportunities for consumers. Ever since we started Laybuy, we have set high standards of information and transparency for customers. Today’s report makes clear it is time for the industry to step up.
“BNPL is an effective and lower-risk tool to help people manage their budget. It’s important that these products remain available for consumers, the vast majority of whom value BNPL services. We therefore welcome the Government’s recognition that the sector must retain its ‘fundamental utility’.
“Clearly there is a concern about the affordability and potential of debt for customers using BNPL services, a concern we share. This is why we are the only provider to conduct a hard credit check on customers and have always worked with Credit Reference Agencies. We reject around 25% of people applying to use our services.
“Our default rates are low (<5%) in comparison to other forms of credit such as credit cards, but if a customer does get into trouble and falls behind on payments, then there is a clear line of communication and will always work with the customer and support them. Our business is not built on minimum payments or late fees, nor should anyone else’s.
“We believe we are already in a good place when it comes to regulation. There needs to be a balance to protect consumers, but also make sure it retains the innovation and simplicity that consumers value.
“We will work closely with the regulator and the Government ahead of the next steps.”
Klarna said: “As a fully licensed bank, Klarna is very comfortable operating in a regulated environment and wholeheartedly supports the regulation of the buy now pay later sector in the UK. We agree that regulation has not kept pace with new products and changes in consumer behaviour and it is now essential that regulation is modern, proportionate and fit for purpose, reflecting both the digital nature of transactions and evolving consumer preferences. This is why we welcomed Woolard Review into change and innovation in the unsecured credit market, we have fully engaged in this process and we now look forward to working together with the FCA, government and the wider sector to build a modern regulatory and supervisory framework that delivers the best outcomes for customers.”