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Klarna has become the first buy now, pay later (BNPL) lender to partner with a new debt support network backed by the UK government, as calls grow for BNPL regulation to happen sooner rather than later.

This week Klarna a new partnership with Money Adviser Network (MAN), a service provided by MoneyHelper, a UK government body.

MAN brings together some of the UK’s largest debt advice providers so that consumers can access free, confidential and independent debt advice on demand.

All MAN members are accredited by MoneyHelper and regulated by the Financial Conduct Authority (FCA), and speaking to MAN does not affect a consumer’s credit score.

Current MAN members include StepChange, Citizens Advice and the National Debtline.

Under the partnership, Klarna said it will begin to “signpost” to the Money Adviser Network on its platform, which will then automatically identify the debt advice service with the most available advisors.

The move is in line with Klarna’s wider efforts to prepare for the implementation of the FCA’s Consumer Duty rules, which will set higher and clearer standards for consumer protection.

Speaking to VIXIO, the FCA said the Consumer Duty will not apply to unregulated BNPL products until these come under FCA regulation.

However, as a provider of other FCA-regulated products and services, Klarna will be subject to Consumer Duty when the new rules go live on July 31, and received a from the FCA reminding it to get compliant before the deadline.

Other BNPL lenders that offer FCA-regulated products and services also received a copy of the same letter.

Consumer protection initiatives

Klarna said the MAN tie-up is the latest in a series of partnerships designed to help customers borrow responsibly and get help when needed.

In May, Klarna a voluntary “opt out” tool that allows customers to “pre-decide” when and when not to use credit to fund their purchases.

The tool was first suggested to the firm by Andrew Griffith, economic secretary to the Treasury, during a meeting with Klarna CEO Sebastian Siemiatkowski.

“Sebastian liked the idea so much he worked with his product teams to implement a first version of the feature less than a month after the meeting,” Klarna said in a statement.

Siemiatkowski said the tool allows customers to build credit usage plans in advance, helping them to “save for a specific event” or to “stick to a very tight budget”.

“Unlike credit card companies, who push you to put all your purchases on credit, we believe that consumers should only use credit when it makes sense for them,” he said.

“That’s why I loved Andrew’s suggestion of a voluntary credit ‘opt out’, so people are in control of their finances.”

In addition, Klarna is working with Fairer Finance, an independent ratings agency, to ensure its terms and conditions are clear to prospective and existing customers — another key theme of the Consumer Duty.

In April, Fairer Finance a study commissioned by Klarna on consumer understanding of credit card agreements, concluding that three in five consumers were unable to answer questions about the agreements correctly.

UK BNPL regulation — delays expected?

Earlier this week, VIXIO reported on rumours that HM Treasury is considering postponing the passage of new legislation that would make BNPL a regulated credit product.

The rumours emerged via a report from Sky News, which said it had been told the Treasury may delay the legislation due to threats from large BNPL firms that they may leave the UK if faced with “heavy-handed” regulation.

Klarna was quick to point out that it is not one of those firms, saying that the rumours were “” and adding that it hopes that BNPL regulation in the UK “happens quickly”.

Alongside Klarna, debt service charities also joined calls for the Treasury not to delay.

Richard Lane, director of external affairs at StepChange, his organisation was “alarmed” by the Treasury’s alleged plans to “shelve” BNPL regulation.

“We’ve long called for proportionate and effective regulation and warmly welcomed the Government announcement last year that they would put in place new rules to protect customers,” he said.

“It makes it even more surprising now that the Government is considering back tracking on previous promises.”

Lane acknowledged that BNPL products are used safely by millions of consumers, but he warned that current approaches to late fees and affordability tests are leading a minority of consumers into debt problems.

“At present, some consumers may hold multiple BNPL agreements that are unaffordable to them, which puts them at risk of escalating fees if they miss repayments,” he said.

“Proportionate regulation will improve these products for millions of customers and we urge the Government to stick to its guns and put customers who might be struggling during a cost of living crisis.”