FCA greenlights Klarna for payment and credit services in the UK
The Financial Conduct Authority (FCA) has authorised Swedish buy now, pay later (BNPL) firm Klarna to provide regulated payment and credit services in the UK.
FCA renews Klarna’s UK licencing
The authorisation extends to the firm’s credit products, Klarna Term Loan and Klarna Card, as well as its payment services, which include its card and open banking-based products.
Short-term interest-free credit products such as BNPL currently remain beyond the scope of the Consumer Credit Act, but Klarna emphasises it has “long argued that they should be regulated to protect consumers from bad actors, while continuing to have access to low cost credit”.
The BNPL provider had previously operated in the UK as Klarna Bank AB, a fully licensed Swedish Bank supported by a temporary permissions regime (TPR) licence.
With that licence set to expire at the end of next month, the firm has paired its renewed regulatory approval with a newly formed entity, Klarna Financial Services UK, which it will now leverage to provide all consumer-facing services in the UK.
Abby Vickers, head of the new UK entity, says the FCA’s approval “puts Klarna’s successful UK business on a secure regulatory footing” ahead of the regulator’s upcoming plans to bring BNPL products under its remit.
The news comes just weeks after reports that Klarna is establishing a new UK-registered holding company in a move poised to position it more favourably for a potential billion-dollar IPO.
