Laybuy has become the latest buy-now pay-later firm to commit to sharing customer data with credit rating agencies today as the sector looks to clampdown on vulnerable shoppers taking on unaffordable debt.
Laybuy, which is New Zealand-headquartered with operations in Australia and the UK, said it will begin sharing debt and payments information with credit reference agency Experian from the 1st September 2022.
Information shared by Laybuy will cover both the amounts owed and payment status of customers, and include details on any missed and late payments, Laybuy said today. The information will be made available to other lenders to help inform credit decisions.
The move comes amid fears that shoppers are taking on mounting levels of debt as they turn to BNPL products to manage the soaring cost of living.
Debt charity StepChange told City A.M. last week that it had found there was “significant crossover” between use of BNPL and financial difficulty, and “very often consumers do not even realise they are taking on credit when using BNPL products.”
BNPL firms have been looking to tighten the guardrails around their products as they brace for regulation next year. Laybuy’s move follows that of Swedish BNPL giant Klarna which committed to sharing customer data with credit rating agencies earlier this year.
Laybuy Managing Director Gary Rohloff said the firm did not “want anyone to be taking on a debt that they cannot afford”.
“That means making sure all lenders have a full understanding of a consumer’s financial situation when considering whether to extend them credit,” he said.
“Providing this broader range of data to Experian will mean lenders can make much more informed decisions about credit by having greater visibility on how a customer is using Laybuy, including their total level of indebtedness and whether they are making their repayments on time.
BNPL firms are set to fall into the remit of the Financial Conduct Authority next year after the Treasury outlined a framework for regulation which included enhanced affordability checks and inclusion within the Financial Ombudsman Service, which provides an official route for customers to complain.