The explosion of uncontrolled credit poses significant risks to consumers, but also to the proper functioning of the banking system.
After a year 2020 marked by the explosion of the use of split payments in the United Kingdom, 2021 was considered the year of regulation of the sector, dominated by companies such as Klarna, Clearpay and Laybuy. In February 2021, a report published by Christopher Woolard, former acting director of the Financial Conduct Authority (FCA, the body responsible for regulating the financial sector across the channel), caused a stir. They showed that one in ten customers was unable to honor the repayment of these interest-free loans. and added that at the macroeconomic level, the explosion of this unregulated credit also posed a major risk to the proper functioning of the banking system. “The report shows that it is relatively easy to raise a debt of £1,000 without the credit reporting agencies or traditional credit bureaus knowing about it” The Secretary of State for the Treasury at the time, John Glenn, reacted.
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