Boom time for ‘buy now, pay later’ firms fuels debt fears for families

The rise of ‘buy now, pay later’ firms has sparked fears that shoppers are being loaded with too much debt.

Firms such as Klarna, Clearpay and Laybuy allow consumers to split the cost of their shopping over a fixed period.

But debt advice charities fear this is leaving customers vulnerable because some of the agreements are not covered by regulations set down by the Financial Conduct Authority.

Most of the firms do not charge interest and loans must be repaid in a year – avoiding the need for affordability and credit checks.

Sue Anderson, of debt charity StepChange, said: ‘We have seen a rise in people coming to us whose debt problems have been caused by buy now, pay later.’

Former Labour MP Lord Mann said new regulations were needed to protect families.

Firms such as Klarna, Clearpay and Laybuy allow consumers to split the cost of their shopping over a fixed period. A stock image is used above [File photo]