Klarna prepares for FCA’s Consumer Duty with Money Adviser Network partnership

Klarna, the global payments network and shopping destination, has announced a partnership with the Money Adviser Network.

This makes it the first buy-now-pay-later (BNPL) to partner with the network as it helps its consumers access free and impartial debt advice quickly. The partnership marks the next stage of Klarna’s wider efforts to promote healthy spending.

Through the partnership, Klarna will signpost debt advice services from members of the Money Adviser Network to its customers. This will enable individuals who are concerned about their finances to access 24/7 support. Those who would like independent and free credit advice are also able to do so.

The Money Adviser Network is provided by MoneyHelper, a UK Government body. It connects consumers directly to the debt advice services of StepChange, Citizens Advice or the National Debtline. The Money Adviser Network automatically identifies the debt advice services with the most available advisers, ensuring consumers can access debt advice as quickly as possible.

Through the Money Adviser Network, Klarna customers will benefit from access to trusted advisers and recommendations for the service with the most agents available at any one time. In turn, they can get help quickly.

Preparing for Consumer Duty

This comes as Klarna, along with the rest of the financial services industry, prepares for the FCA’s implementation of its Consumer Duty. This will set higher and clearer standards of consumer protection across firms. It requires them to put their customers’ needs first.

This partnership is the latest addition in a string of announcements by Klarna highlighting how it is supporting its customers to borrow responsibly. Recent initiatives include the launch of Klarna’s credit ‘opt out’ tool enabling customers to ‘pre-decide’ not to use credit, and its ongoing work with Fairer Finance to ensure its terms and conditions are clear and simple to understand.

Klarna is also trialling open banking data to improve its affordability assessments. It also continues to limit access to its credit products for those consumers who fall behind on their payments. This, in turn, prevents debt from accumulating.

Flora Coleman, director of global policy and government relations at Klarna, said: “We are proud to be the first BNPL service to join forces with MAN. We look forward to giving customers a simplified route to debt advice. We’re calling on other BNPL providers to join us in providing the same access to advice and support. Consequently, we want to ensure that customers’ interests are always put first.”

Setting an industry standard

For Krista Griggs, head of banking, financial services and insurance at Fujitsu UK, this partnership will be critical for educating young people and vulnerable groups. Especially those who rely heavily on digital services as opposed to legacy institutions.

She said: “It’s become harder than ever for consumers to understand the risks associated with the many different payment, investment and loan services that have cropped up in recent years. Especially as digital banking has become more mainstream and varied. Traditional banks like NatWest and Nationwide have long been good at this.

“With potential regulations in the pipeline regarding financial institutions’ duty to consumers, it’s encouraging to see a newer player like Klarna offering educational services. Hopefully, it’s a trend we’ll see become more widespread.

“This will be pivotal for younger consumers, in particular. The powerful influence social media personalities have on Gen Z threatens to impact how they use their money and potentially encourage irresponsible decisions. Fintechs like Klarna are uniquely positioned to educate them. Especially given how well adopted these alternative payment providers and neobanks are among digital natives and lower-income groups.

“Beyond this, institutions should also be looking to provide better and more granular services to the underbanked. For example, AI – supported by open data – could help to aggregate past financial data to support micro-loan applications for people who have found themselves with a poor credit rating in the past. This can unlock finance options that previously would have been inaccessible to them. By doing this, and more, financial institutions can ensure that nobody is left behind as banking evolves.”

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