Klarna, an AI-driven payments network and shopping assistant, has recently achieved authorisation from the UK’s FCA.
According to FinTech Finance, this authorization enables the company to provide regulated payments and credit services within the UK, a significant development following the post-Brexit scenario.
Previously, operating under the FCA’s Temporary Permissions Regime (TPR) due to Brexit implications, Klarna Bank AB, a Swedish licensed bank, had continued its UK operations. The establishment of Klarna Financial Services UK, a UK-based entity, marks the firm’s commitment to the UK market, ensuring uninterrupted service post-TPR expiry on 31 December.
The FCA authorization specifically encompasses Klarna’s regulated credit and payment products. Notably, Klarna’s short-term, interest-free ‘Buy Now, Pay Later’ (BNPL) products remain outside the Consumer Credit Act’s purview. However, Klarna has been a vocal advocate for the regulation of such products to safeguard consumers while maintaining access to low-cost credit options.
The firm has been consistent in upholding high standards of consumer protection. Its credit products are designed to offer a sustainable and equitable credit access model. The company implements stringent eligibility checks for its regulated credit offerings to ensure responsible lending. In cases of missed payments, Klarna proactively restricts access to further credit services, preventing the accumulation of consumer debt.
“Klarna has always operated under the oversight of the FCA, delivering our regulated products to a very high standard of customer care. As well as enabling us to continue to provide our regulated products, the FCA approval puts Klarna’s successful UK business on a secure regulatory footing ahead of the expected regulation of BNPL,” Abby Vickers, Head of Klarna Financial Services UK, said.
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