Swedish payments firm Klarna has appointed Sir Michael Moritz as its chairman
Controversial payments firm Klarna has appointed a veteran investor as chairman amid growing concerns that it is enticing young people into dangerous levels of debt.
The Swedish ‘buy now, pay later’ (BNPL) firm, which works with 200,000 brands from Asos to Halfords, named Sir Michael Moritz (pictured) as its chairman. He is well-known in America’s Silicon Valley start-up bubble but rarely takes on chairmanships.
Klarna allows customers to put off paying for an item, and is becoming increasingly popular with cash-strapped youngsters hooked on fast fashion. Retailers such as Boohoo and H&M offer Klarna payment options.
it has more than 7m customers in the UK and can also be used to buy items like sofas and cars.
Some payment plans are interest-free but its Klarna Finance products, which spread instalments across six to 36 months, carry interest rates of up to 18.99 per cent.
This can quickly cause the price of items such as a £1,500 sofa to rocket. Labour MP Yvonne Fovargue, of the All Party Parliamentary group on debt and personal finance, is ‘very concerned’ about the rise of BNPL.
She said: ‘These products need to be regulated by the Financial Conduct Authority (FCA).’
BNPL is not regulated by the City watchdog, though it is undertaking a review into how it can better support customers.
Campaigner Alice Tapper said: ‘It’s presented as a risk-free option and is normalising debt. I think that in itself is a problem.’
She has been contacted by hordes of people who have trapped themselves in a spiral of debt through BNPL. She said: ‘I’ve seen young women racking up £8,000 of debt across BNPL providers.’
Klarna declined to comment last night because the FCA review was ongoing.
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